treasury.id you anticipate any more capital injections? >> well, no. i certainly hope not. i think this is worth talking about 'cause it answers another question that was posed earlier which is we sit today holding 56% of the common stock. but we also hold significant convertible preferred stock, which if there is further deterioration in the quality -- this is how banking regulators talk about capital and the quality of its capital, common stock is a higher quality capital more loss absorbing than preferred stock, we actually sit on a lot of preferred stock that is convertible into common. it would be further dilutive of the other shareholders interests were we to do it but it would help sustain gmac's capital position if needed. i think -- we sort of recognizes if it needs us to convert we may very well to have. but from the point of view of our exit strategy we think the most likely way the taxpayers would be paid back here is through an initial public offering. remember, this is now a priva

board, declaration by the executive branch, secretary of treasury.o i think there should be a very high bar to exercise that authority. >> rose: you now what's called vocal rules. >> right. >> rose: paul volcker wants to see certain activities of banks that were there when you were at goldman sachs and which unless they change the rules continue this that have... deposit banks can be prevented from engaging in proprietary trading and having interest in hedge funds and private equity. are you at one with mr. volcker on that? >> i'm not at one on that. >> rose: why not? >> why, as i said, my first priority by far is the kind of broad authority i just descbed to you and i don't want to slow down the process. and when i look at what i went through-- bear stearns, lehman, a.i.g., washington mutual, wachovia, fannie mae, freddie mac-- that authority wouldn't have made any difference. it wouldn't have helped us in any of those situations. rose: but would we have had the problem if those institutions... if they there hasn't been any... >> as i said, i don't

the treasury provides three-year budgets to departments. also provides for the urgent operational requirements of the ministry of defence. there is no sense in which we were trying to cut the ministry of defense's budget. what happened was in one year they overspent and had to adjust their budget accordingly. >> so you do not accept the fact that we are now desperately trying to procure more helicopters and refurbish them showing that previously perhaps, when you were in charge of the budget, that we were not making the right decisions to procure them at that time? you just cannot accept that? >> i am saying that the ministry of defense was given the biggest settlement in 20 years. it was their decisions about how they dealt -- about how they allocated the money to the specific -- specific programs. it was not for me to tell the ministry of defense whether to spend their money on this so that. >> i am not going to pursue this but this is not what general lord walker says. he says there were given line by line items. what happens now? >> you

i was secretary of the treasury in 2008. in that role, i had the privilege to work with many talented men and women in the government who will labor to pull our nation back from the brink of disaster. the decision to rescue aig was correct. and i strongly supported it. and aig failure would have been devastating to the financial system and to the economy. today's hearing relates to payments to aig's credit default swap counterparties. i was not involved in any of the decisions made with respect to those payments nor was i involved in any of the decisions about aig's public disclosure of those payments. those matters were paneled by the federal reserve bank of new york and the federal reserve board. they sought to make appreciate decisions on those matters, and i am confident that this review will show that they did. i have limited knowledge on the topics of immediate interest to the committee. but i will share the following observations. the rescue of aig was necessary. i believe we have a government that asked to rescue it,

not only did paulson go straight to the treasury, his key deputies were also golan men. under barack obama, former goldman boss and clinton treasury secretary robert ruin rubin is an economic advisor and former goldman lobbyist is now the chief of staff of the u.s. treasury. >> america was meant to be a capitalist system, where there's supposed to be a level playing field. what has happened here is that goldman has basically usurped this to its own advantage, depth perception that people have in the united states. as i say, now the investment banks look like they're apex predator who's have bought and sold our congress, and goldman seems to be predator x because they have such influential positions in washington and they are basically in the public eye, seem to be running a financial oligarchary while claiming superiority. >> in 2001 it did a complicated currency deal to make greece's debt look smaller than it was. the deal was legal at the time but has since been made impossible to repeat. in t now turns out goldman was also doing deals for other stricken e.u. countries

you to own treasuries. it's the only other thing on the other side of the seesaw right now. the second thing i would suggest is i think people have been too globally focused. i think the opportunities in the next 6, 12, 18 months are in small cap u.s. companies. i think that is the big story going forward. i think people are going to be surprised by that over the next year, year and a half, how successful that might be. >> rick quick, rick santelli, you have the last word. >> last word is i don't disagree, treasuries and the dollar might look good now. it's only because there's more flies on the other little piles around us. be very careful about squatting in treasuries for any length of time. >> great advice. thanks, everybody. we'll continue focusing on this market and how to protect yourself. still to come on "closing bell," are sovereign debt problems in europe a sign of even bigger issues to come for the developed nations? we're talking the u.s. are the worries being blown out of proportion? we'll get

the treasuries maybe ranged out. there's a tug of war on the treasuries. they might be somewhere between 1120 on the bonds, 116. >> thank you. >> thank you. >> bank of america took a 5% hit thursday after fraud charges were announced against the bank. former c.e.o. and chief financial officer. new york general attorney filed a lawsuit in state court thursday alleging top management hid skyrocketing losses at merrill lynch totals $15 billion at the time it was bought out. the lawsuit alleges once the deal was approved, bank of america's management manipulated the federal government into saving the deal with billions in taxpayer funds, by falsely claiming that they intended to back out of the deal through a clause in the merger agreement. the bank received an additional $20 billion in taxpayer money to cover losses at merrill lynch. in a statement, bank said the evidence demonstrates that bank of america and its executives, including we know louis and joe price at all times acted in good faith and consistent with their legal and fiduciary obligations. it was

the treasury notes, treasury bills, treasury two years, five years, ten years. but you are buying, you buying their debt. >> we are paying them interest on their deposits in our balance sheet. >> okay. that isn't the answer i wanted. given what you learned during the aig crisis and the bailout do you think congress should be doing something to address insurance regulation or the commercial paper markets? >> well, senator, i think aig is the poster child for first consolidated supervision. it did not have a strong consolidated supervisor that was paying attention to its activities. that is very important to do. secondly -- >> were those ones in england? >> no, those were the ones, the credit default swaps, the financial products division. >> weren't they located in london? >> well, they were in any case accessible to u.s. regulators. >> i didn't ask that question. i said didn't aig have an office in london that did those things? >> it had some foreign offices. i believe the financial products division is headquartered in connecticut. >> okay. go right ahead. >> s

have paid it back now, the treasury is recycling that money. senator gregg and i have been very firm about we were in the room when the conversation was made as to what would happen to that money when it came, and we thought that we rode into the law the requirement that when it. >> it would be used to pay down the national debt but we've been informed by the treasury lawyers that that's not what we did. in and i would like your reaction, my opinion is t.a.r.p. solvents problems, t.a.r.p. did, indeed, avoid a worldwide depression. it ruled by collapse and not, maybe a bar in a row by depression but t.a.r.p. did, indeed, avoid air worldwide collapse in that very difficult weekend in september when you came here and said i'd run out of tools, very chilling kind of comment. while my colleagues and i felt like it was a james bond movie listened to the chairman of the federal reserve segui run at the tools. i think t.a.r.p. worked, my position and that like your reaction is that having worked it's now time to end it. so that the treasury does not re

your treasury data demonstrates that the 22 banks that got the most help from treasury bailout programstually been decreasing small-business lending. of the inspector general's report on january 30, the t.a.r.p. report, says exactly the same thing. so, my first question to you picks up on the chairman's point about the urgency at of small business funding. tell me if you would out the new program that is being discussed is going to be an improvement on the two programs that your own data and the inspectors general have said are not working? >> i think if you look carefully at the evidence the people who took the t.a.r.p. money in those who didn't i still think the evidence is pretty good on a relative basis. you saw less sharp reduction lending. >> knots for small business. >> again the point is our basic challenges however be going to make this better and power be going to fix it? to be honest about it, the big challenge we have had is that small banks have not been willing to come and take advantage of these programs because they have been deeply concerned about both the stigma that c

that is the number of institutions which the treasury has recaps allies. whatever your theory is of too big to fail, i doubt that it comes up to 600 or 690. so we clearly have a situation where we are basically allowing anyone to yell in a crowded room systemic risk, we give the money. and it is my view that we need to develop and articulate rationale, and limited rationale, and in a much more disciplined process by which we decide when and where we are going to bailout institutions. and also have some system of accountability. right now over a weekend, something happens, lots of people gets it about. that's one of the major themes of my book and one of the things i think are really important to financial reform. a second theme is boards of directors. i think many people are wondering how involved is the federal government going to become a with things like executives? we have ken feinberg of proving financial, in particular institutions, and we have defined that now taking do that they are going to look to see to prove or disapprove whether comp is risky

when i left the treasury, we de la hoya bensen gave me my first job at treasury. -- first under secretarybaker. lloyd bentsen gave me my first job at treasury. there was nothing good for business and that swing. -- in that swing. we are trying to dig out of it. we are willing to work with you on how best to do that, but our priorities, again, are to fix what is broken, people are back to work. if we do that well, then we will be in a better position to help dig ourselves a lot of that fiscal hole. >> where i come from, when you're in a whole, you stop digging. -- when you are in ta hole. we want to see where we can find ways to move ahead and get jobs started again in this country. thank you. >> we can start the clock over for mr. lwevin. -- levin. >> i just want to be clear about the numbers. there is a new category now called the democrats' control budgets, -- democrats control budgets. [gavel] >> mr. levin will proceed. >> i think we need to find common ground, but it will not work if people try to escape from the past, and i think everyone needs to remember that the sentence you read

your own treasury chief economic advisor says it is 70%.land, spain, and the u.k. have -- have the underlying structural problems. >> i do not believe in the structural problem. the reason we are confident that our deficit reduction plan will deal with problems dealing with the recession is because we entered the recession with a very low level of debt than other countries. you have to go back to what the level of debt was and the underlying level of debt was lower than america, germany, france injuring into the recession. i just want to say that you are basing all of your questions on that. otherwise more people would have been unemployed and we would have made mistakes of the 1990's. >> what about the structural deficit? >> i am talking about the level of debt necessary. the level of that was lower than other countries. it meant we were able to run a flexible amounts of policy with a high deficit to bring us through the recession. i think history will show that in comparison with the 1980's and 1990's recessions we've done things to keep

treasury secretary tim geithner was in the cross hairs. hampton pearson never in the cross hairs, full of lucidity joins us with the details. good evening. >> good evening. the treasury secretary was giving it his beth shot saying the obama administration's $3.8 trillion 2011 budget, yes, a balancing act. in the short run job creation including tax breaks for small business and more incentives for banks to provide credit is a top priority. however reducing the deficit but not enough to risk return to recession. at one point in a hearing arizona republican senator john kyle pushed geithner to connect the dots between skyrocketing debt and the threat to the dollar. >> if we do not make people believe that we are going to bring down the deficits over time we will risk losing confidence in financial future and that will raise interest rates, less investment. that's bad for the american economy. >> finance committee republicans were skeptical about the bank tax designed to raise $90 billion over ten years to recoup t.a.r.p. money used to rescue

when i left the treasury, we de la hoya bensen gave me my first job at treasury. -- first under secretaryim baker. lloyd bentsen gave me my first job at treasury. there was nothing good for business and that swing. -- in that swing. we are trying to dig out of it. we are willing to work with you on how best to do that, but our priorities, again, are to fix what is broken, people are back to work. if we do that well, then we will be in a better position to help dig ourselves a lot of that fiscal hole. >> where i come from, when you're in a whole, you stop digging. -- when you are in ta hole. we want to see where we can find ways to move ahead and get jobs started again in this country. thank you. >> we can start the clock over for mr. lwevin. -- levin. >> i just want to be clear about the numbers. there is a new category now called the democrats' control budgets, -- democrats control budgets. [gavel] >> mr. levin will proceed. >> i think we need to find common ground, but it will not work if people try to escape from the past, and i think everyone needs to remember that the sentence you re

and treasury secretary geithner is back on capitol hill, talking about the budget again. he'll be questioned by the house ways and means committee. also, hilary kramer is back as our street critique guest. she'll recommend some stocks she says can make you money, even in a turbulent market. a price war is under way in the online brokerage market. fidelity investments today slashed the cost of buying stocks and exchange traded funds to just under $8 a trade. they were as high as about $20. and fidelity has a special offer for its customers: they can trade 25 i-shares exchange traded funds without paying any commission. rival charles schwab got the price cutting started a month ago. that's when it lowered its online prices to just under $9 a trade. >> tom: one small step for the obama administration. one giant leap for private industry. today nasa awarded $50 million in grants to private firms for commercial space development. the bulk of the money goes to two companies, the sierra nevada corporation and boeing. nasa wants the private sector to build nasa's next generation

i am the treasury secretary.ke the capital, we're not going to be subjected to conditions in the future debt would make it harder for us to run those banks, so we're going try to navigate through those pressures. >>ñr well, the system is not working. . >> there are a bunch of us that are introducing a provision whereby banksç future tax deductions on large banks, that they are going to depend on responsible executive compensation. and the form would require banks to adopt policies that reward long-term performance. so extended vesting, pay, and employer stock, call back arrangements for misconduct. all of those things would be required. and the banks that adopt these responsible pay practices for their executives. would therefore see no loss in benefits and banks that continue those irresponsible executive compensation practices would see their bank taxes rise. is that something you can get behind? >> you have exactly the right objectives and rightç standard how to encourage more prudent risk taking not in sens

treasury market is at this point. it's rarely predominately under two years maturity, so inflating your way out of the debt problem is not, i think, a great solution for treasuries. now and would probably change in the morgan market and some of the private debt if you had an abrupt rates and inflation. but i think to get out of the government debt is not very strong. i will see back to you the chairmanship. so go ahead. >> one minute break. yes, question? >> i have to question. the chief economist produced a report last week's adjusting that central bank should raise their inflation target from right to present to the four to 6% rate. is this now the official policy of the imf and dorsey higher inflation the solutions are fiscal problems? credit demand a both a household private sector is declining. we've had a big reduction of bank loans in the last six months and so on. let's look at 22012. is so there's no progress on this fiscal problem we're talking about here today and we're still looking of budget deficits, 1.2

i admire him a lot more after the job he has done as secretary of the treasury. the name of this book is "on the brink," and that's exactly where we were in september and october of 2008. at that time, our economy, our financial world went into cardiac arrest. and we had four people in the operating room that we were very fortunate as a country to have in place. we had hank. we have ben bernanke. we have tim geithner, and we had sheila bair, the head of the fdic. and i know a lot people in finance. i know a lot of people in business. i know a lot of people in government. and i can't think of four that would have done a better job of getting us through that. now it's kind of fashionable now to look back and pick out one little aspect or another of what was happening then, but our country's financial system froze up during that period. some of you in this room were at a party i was at in september of 2008 when the talk was, are our money market funds safe? now, when you have 3.5 or more trillion of funds held by 30 million people, who on a sunday night are worrying

the treasury is saying it. we have to get full international support and cooperation to do the reconstruction. >> we have to move out of that area. >> mr. chilcot would like to a question. >> he assured you you would be given military options. when was that? i didn't get the date. >> it was september. >> september of 2002? >> there was a meeting on the 20 third of july 2002 when these options were discussed? >> he told me in mozambique that i haven't had a presentation. what are the military options? hadn't had a presentation, i will come back to you. there have been many missing things. >> will you give them a presentation of military options? >> the military came to my office -- check couldn't remember them -- about the air targets and how it would be careful targeting and taking out a point about the fragility of the sewage water and electricity. we had that but no presentation or military options but that is the reassurance on the possibility that has destroyed the infrastructure that happened in another wa

one article that i was reading last night felt that you should invest more in treasury notes as opposed to other actions that you're taking. can you comment on the steps you're taking to really move our financial institutions and total economy to the proper functioning, expanding economically in other ways to help the people of america? >> yes. we have two broad sets of policies, roughly speaking. one was a set of special facilities, lending facilities that were intended to -- which were extremely disrupted by the crisis. those facilities have been quite successful. they have helped stabilize the commercial paper market and the repo market and many other important financial markets. with the improvement and stabilization of those markets we have been shutting those down and many of them were shut down february 1st and this was what congresswoman waters asked about and so on. so we believe as those financial markets are normalizing, we can begin to reduce that source of support. the other approach, the other policy, set of policies we have is monetary policies intended to support the rec

treasury market is at this point.turity, so inflating your way out of the debt problem is not, i think, a great solution for treasuries. now and would probably change in the morgan market and some of the private debt if you had an abrupt rates and inflation. but i think to get out of the government debt is not very strong. i will see back to you the chairmanship. so go ahead. >> one minute break. yes, question? >> i have to question. the chief economist produced a report last week's adjusting that central bank should raise their inflation target from right to present to the four to 6% rate. is this now the official policy of the imf and dorsey higher inflation the solutions are fiscal problems? credit demand a both a household private sector is declining. we've had a big reduction of bank loans in the last six months and so on. let's look at 22012. is so there's no progress on this fiscal problem we're talking about here today and we're still looking of budget deficits, 1.21.3 trillion. how high could bond yields go i

was at dartmouth as a tackle i think but when the president asked him to become secretary of the treasury, and hank's initial reaction was not to do it but he decided to give it -- that he had won a bid to become big worry and the crowd might be interested in knowing what makes a grown man crumble. >> warren is talking about my mom, and i'm quite close to my mother. she's a strong woman, very engaged and interested in politics and policy and she wasn't an admiral george bush and was very unhappy with the war and very interested in women's issues and so on so there's been a fair amount of speculation in the press that i might go to washington and i turned down the opportunity a couple of times and i assured her a was not going to go because i had no intent of going but then when on a reverse myself and decided very suddenly it was the right thing to do not to say no to my country i was it l.i.e. where we still have our primary residence and i was there on memorial day weekend because the president was going to make the announcement the tuesday after memorial day weekend, so i was going to

i add my durham a lot more after the job he's done as the secretary of treasury. the name of the book is on the brink and that is exactly where we were in september and october 2008. at that time, our economy, our financial world went into cardiac arrest and we had four people in the operating room we were fortunate as a country to have in place. we had hank, ben bernanke tim geithner and sheila bair the head of the fdic. i know a lot of people in finance and a lot of people in business and government. and i can't think of for that would have done a better job of getting us through that. now it's kind of fashionable to look back and pick at one aspect or another of what was happening and our country's financial system froze up during that period. some of you in this room were at a party i was at in september of 2008, one to talk was the money market funds saved. if we have 3.5 trillion fun missile by 30 million people who on is and they might are worrying about whether they can get their money that was half of all the process held by u.s. banks at the time you hav

you know the way the treasury works. we allocate budgets on the three-year period to the different departments. i repeat that the ministry of defense's settlement was welcomed at the time as the largest increase for 20 years. it was for the ministry itself to make the decision within his budget how it would spend on the particular items. as far as helicopters, i want to assure you that we've almost doubled the helicopters numbers in afghanistan in the last three years. we've more than doubled the flying hours, we've fitted more powerful engines and improved carpeted at the cost of some 400 million while conducting an urgent program to introduce into service operations. so we have tried to make sure that in this new terrain of afghanistan helicopters -- moved from iraq. >> nobody denies. but the program should have been ready by 2010. it's not going to be ready by late 2010 now. it's been a six-month delay. it was supposed to deliver the first link by the end of 2009. they are still having delays in meeting them. what i'm

i'm the secretary of the treasury. is looking for other guidance to be responsive to that concern but you're absolutely right. they say the same things to me. it's not any different. the third thing they say is, that we need the ability to get capital and more help from the sba. what they say is, that we need some -- a little bit more confidence that if we come and take that capital, we're not going to be subjected to conditions in the future that are going to make it harder for us run our banks. we are trying to navigate through those pressures. i completely agree to you and they say the same thing to us and basically they have it right. >> well, the system is not working. and we're, the government -- we're supposed to help the people by making the system work. and you say you don't have any control over the regulators. but your boss does. your boss is the president of the united states. and he has the power of persuasion. what we would say in the south, well, go have a little prayer session with him. we got to get th

>> guest: you are certainly not going to get a former treasury secretary. [laughter] because i really do believe and i worked very hard that the strong dollar is just very much in our interest and the essential to the success and the pre-eminence of the united states of america. i believe that the best way to have a strong dollar is again looking over a long term view, have a strong economy and to have fiscal discipline. i will not tell you what i think will happen with the dollar the next five or 10 years, but what i really focused on because we tend to give away a lot of the money and a relatively short period of time. >> host: so making you the trustee for my children and said fixed income with you prefer stocks or bonds or the straight bonds? >> i give up. i take your advice. >> but i would ask myself the question that gets backed to where you go, which is that gets the currency a little bit. i have spent a lot of time outside of this country with all of the major economies. and believe me, every other major economy, china included as many more our city

the treasury set of some kind of working group and came with no money. no money -- money is tight, and we have to have resolution so we can get everyone in. that was the treasury response, and we only got extra money until it started. how you can find an exemplary role when it is not late is impossible. there is one other thing on this. at some play, my officials suggested we sent a couple with our military to the south, and i said we should go on the scoping mission, but we should not put people in because we did not have the money, and if we put people in like we were going to bring lots of money, that would be greedy, so we sent a scoping mission. we had no answer. it is part of the dysfunctional nature of the government. >> as far as you are aware, you send off this letter. you are not aware of response. >> the response we got in the end was after the invasion started. prior to that, we got the results of this group saying there is no money, and that is where we have a unique resolution. >> we were taking on a potential role, but when you ask for mor

tavis: -- the treasury may need to staff in.is: the senate was told today that another attempted terrorist attack on u.s. soil is almost certain. your thoughts? >> unfortunately, it is not a surprise. i think we know we are opposed by relentless adversaries, people who believe in an ideology of islamic jihad. unfortunately, we saw this latest incident on christmas day in the form of somebody flying on a delta aircraft in the united states, not somebody would normally suspect. because of our visa policies, this individual had a tourist visa in houston, texas, previously, and was going into detroit on this trip. this is not a matter of just screening people at the airport, this is a matter of immigration laws and make sure that only people who are not threats to our country get visas. tavis: is also a matter of not connecting the dots? >> also -- absolutely, and it is also as treating this as an act of terror. i used to be a judge for 13 years and have a fair amount of experience in our civil justice system. it is really set up to

. >> the chinese are not going to be buying as many dollars, as many treasuries going forward as they have. and one of the speculations that we can make is that there may well be a shift in the currency, a revaluation, albeit a small bun. but i'll almost positive if they do that that will be made alongside a chinese announcement they're not going to be buying the dollars and taking the treasury exposure going forward. >> china's response to economic crisis has been to rely more on domestic demand, concentrate more on its own territory. that's made it less interdependent with the outside world. and it's that that's brought a new stridensy and confidence to china's diplomatic game. game. >> paul mason joins us from san francisco -- and from noting ham, dr. li yu. when china says it's strongly satisfied and -- international relations they're really pretty grumpy about, this aren't they? >> they are. but president obama is one of a long line o presidents who met with the dali lama. every time beijing has wasted its anger about it but israel prose's are gone -- u.s. presidents have gone fo

as a result of the statute and the accompanying regulations promulgated by treasury,ia there are a fewbasic conclusions that i have reached about executive compensation at these companies. one, guaranteed income should not be permitted. compensation of key officials at these companies that owe so much to the american taxpayer should depend on performance, not retention contract, not guaranteed bonuses. what you earn, other than your base cash salary, should depend on long-term performance. , objective metric promulgated by the company in conjunction second, based cash salaries should rarely exceed $500,000 and only then for good cause shown and should be, in many cases, well under $500,000. third, the special master preserves the right to pull back excessive compensation which is granted based on what proved to be material ms. statements. we will exercise that authority to pull back compensation inappropriate cases. the final summary 0.1 to make concerning inquiry made by this committee when they ask me to comment on a rather interesting question posed by the chair and the members of t

the treasury now expects to lose $48 billion on the government's investment in a.i.g.. darren gersh, "nightly business report," washington. >> tom: the billions spent on a.i.g.'s bailout have contributed to the mounting national debt. today, president obama named four new members to his panel charged with reducing that red ink. they are alice rivlin, a former federal reserve vice president; honeywell international chief executive david cote; andy stern, president of the two million member service employees international union and ann fudge, former chief executive of young and rubicam brands. meantime, a million laid-off americans will lose their federal unemployment benefits this weekend. starting monday, they'll no longer be able to apply for those benefits or the cobra health insurance subsidy. lawmakers repeatedly tried to approve a 30-day extension this week. but senator jim bunning, a republican from kentucky prevented the $10 billion measure from passing, saying it needs to be paid for first. still ahead on the program, we'll find out what exchange traded funds to

we did workÑi with the congress and the treasury which has really not met expectations at this point.ure was to give principal reductions and forgiveness. we would like the rest of that answer in writing. thank you. Ñi i watched and listened with interest to the opening statements here since january of 2007, since every spending bill originates in the house, we have had democratic majorities in the house and senate and i was a critic as you might recall ofÑi republican spending in 2005-2006. since 2007, it has been explosive. i think there is some confusion on the part of the public in terms of where the spending comes from. to me, when içó first reviewed e administration proposal. something that struck me was the fact that at no point does in where in the future does our administration expect to have a balanced budget. at no point according to its own numbers and presuming do they expect this to change. ñr the deficits are expected to spike dramatically in 2020 the failure to operate within our mean plung our nation deeper and deeper into debt. when we talk about the interest to expa

. >> let's talk about aig and saying what you want about the treasury secretary, tim geithner. a couple of weeks back geithner said this about aig. he said the situation of aig today is substantially better than it was six or 12 months ago. aig's insurance subsidiaries are open for business and generating positive returns. fast forward to today, the stock's down nearly 9% and the insurer, the very face of government bailouts posting an $8.9 billion loss saying it may, in fact, need more of your money, you being the taxpayer. gary kaminsky, when i heard this and i thought of geithner's comments just a few weeks back, tinned katit indicated to me one part of aig to not warn the taxpayer, it's largest shareholder of this or to think that things got much, much worse in a very amount of time, gary. >> melissa, you and i think exactly alike. i can't even believe that the mainstream media has given tiny tim a pass here. i mean, the fact that -- we know he can't pay his taxes. if he's an analyst here and he's given this type of guidance in terms of aig's business, i'm shocked that the

when i left the treasury, we de la hoya bensen gave me my first job at treasury. -- first under secretary baker. lloyd bentsen gave me my first job at treasury. there was nothing good for business and that swing. -- in that swing. we are trying to dig out of it. we are willing to work with you on how best to do that, but our priorities, again, are to fix what is broken, people are back to work. if we do that well, then we will be in a better position to help dig ourselves a lot of that fiscal hole. >> where i come from, when you're in a whole, you stop digging. -- when you are in ta hole. we want to see where we can find ways to move ahead and get jobs started again in this country. thank you. >> we can start the clock over for mr. lwevin. -- levin. >> i just want to be clear about the numbers. there is a new category now called the democrats' control budgets, -- democrats control budgets. [gavel] >> mr. levin will proceed. >> i think we need to find common ground, but it will not work if people try to escape from the past, and i think everyone needs to remember that the sentence you read

treasury? >> that's the thing. they're going to look carefully at the u.s. fed and what is being done at the u.s. fed. they're looking at the timing of the qe program. don't look at the interest rate policy. look at the qe program. as long as that stays in place, bond yields will be pretty much dpresd as no big shocks coming down the surprise for investors. the moment the qe program gets pulled, that's the opportunity again for downside risk on bonds. so yeah, that is a very cautious counter i think looking at the back end of this year. >> okay. andy, you're going to stick around. we'll delve into the u.s. bond markets coming out later on today. still to come, let's remind you of some of the other stories we're following. euro sector expanded in january. meanwhile, here in the uk, just a little bit more disappointing. the market pmi number was 56.8 in december. it fell to 54.5 in january. well below forecasts. some of that probably was due to the fact that we have the fear, weather-affected economy particularly around the leisure and retail sector. so we may

not seeing that in treasury yields. treasury yields have been kind of tame. and, in fact, investors are moving into u.s. assets and not away from them during all this. so another reason to say this is europe's problem. we're keeping our hands out of this, keeping our math out of this conversation. >> all right. >> thank you very much. >> thank you, john. >> mark, as mary reminded me, goldman sachs is only taking stock so he will only have stock too. >> yeah. sure. coming up the guy who made the most money for his institutional most money for his institutional clients through last year. >>> here is what's happening 30 minutes into trading. >> what, mark, is happening? >> there we go. the white house's christina romer tells "squawk on the street" she is encouraged by the january jobs report and that president obama will announce another lending program for small businesses today. stocks are moving modestly. travelers, the biggest gainer on the dow up more than 1%. boeing the big loser. tyson, airgas, trading at -- 52-week

yet, their ten-year treasury is trading at 4.14%, barely above ours. >> listen, spain -- they have a budget deficit like we do. it's not like we don't have the same problems that the either governments do. it's a question of whether they're able to borrow their way out of it the way we're trying to do. spain, i think, needs to raise, what $160 billion. by our measure, that would be nothing, right? but at same time, 12% of gdp, don't hold me to those numbers but i'm more or less directionally correct there. it just is continues concern about these overall deficits, spain had a huge housing bubble, just like we did. and it also has had to help stave off a dire potential consequence for its own economy spending money, hence in a similar position to other european and, of course, our own country. >> peter kenny, what is the real reason for the sell-off today? i mean, are people overreacting to some of these concerns or is this just a beginning of a much broader sell off, because we came too far, too fast? >> a great question. we have come very far, and very fast. however, you have to loo

once he was nominated as secretary of the treasury. but when i asked him for his recusal agreement for the record he stated, there was no documentation. no recusal agreement exists. nothing legal, no waiver, nothing. he made decisions and only he is accountable for them. there was a gasp in the room. beyond the shadow land of our nation's financial system, our small community banks are struggling as bad loans from commercial and residential real estate continue to plague our financial system. the small community banks that have survived are trying to lend to small businesses that are the engine of our economy but they cannot do so if the big banks are holding credit hostage. and turning to tarp is not the answer for our community banks because it isn't treasury's job to pick winners and losers in the commercial marketplace. that should be a market function. the end result is that small businesses are dying too. the small community banks cannot loan to local small business. without access to credit, small business is letting people go,

was that when you receive the word that you were going to be nominated for treasury secretary?ncement was made. >> so you have tried to distance yourself from decisions that were made before that but in fact-- >> i have not-- i take pride in full responsibility for all those decisions. >> okay then you also were aware win the new york federal reserve board ultimately selected on november 3rd, 2008, to purchase the underlying assets? >> absolutely, yes. as i said i take pride-- >> also you had no, you had no knowledge of any cover-up, right? for intent not to give full information and disclosure? >> of course not. >> of course not so you took credit for the decision but not the cover-up. you have distanced yourself from any cover-up before november 24th and then of course you were out of the picture from november 24th forward, is that correct? >> congressman i am not trying to distance myself from anything. i will take complete responsibility for decisions i was part of shaping including all decisions up to the 24th in this case and i'm happy to take responsibility for all the d

and david malpass, a former treasury official in two republican administrations and chief economist at bear stearns. he now heads his own economic advisory firm, encima global. >> robert kuttner, today's report is in some ways even more confusing than usual. how do you parse the good job news and the bad job news. >> the labor department does two different kinds of surveys. they ask households whether people are working or not and then they ask employers how many jobs they have. so one indicator went one way, the other indicator went the other way. the survey of employers, the one that shows the $20,000 job loss is usually considered the more reliable one on a month to month basis. so this is not terrific news, particularly when you measure it against the loss of something like a million more jobs than were originally sought to be lost once they went back and they actually looked at unemployment records and tidied up their estimates from the previous year. the problem is you've got the 8.4 million we lost and population growth and you need 11 million new jobs to get back to the unemplo

despite all of the evidence that has been there, i do not believe the treasury department has been ablenclude that any country was using its rate for their -- for another country's the advantage. i like to say that if systemic regulators use the data and analysis appropriately, that t(regulator would only be subjet to criticism. if he or she is successful, we would never see the next systemic event, and the actions would have taken some progress away from someone and would have slowed down the good times. if the regulators reached the conclusion and the the time would come to present the conclusion publicly, i can just hear the wheels turning in the mind of the director and he or she would say "i do not know if we should released this. let's wait a little while." this issue of independence is essential and critical to the ability to do its job. >> thank you. there is a similar relationship with cbo. the degree of independence we appreciate and sometimes we disparage. i believe that director is appointed for a term of five years. he or she serves independent of the. they have proven that

treasury. but it's coming out of europe.t's portugal now putting out a plan to cut deficit below 3% of gapd, which, by the way, i don't think they can do soon. ewe know about greece. spain's down 6% today. so the markets are going after the weak players here. it's -- we're getting the macro numbers and the market's response. so i think there's a lot of risk. if you talk to investors here, people are bullish about the growth coming out of the emerging world and to the extent that can support develop. there are so many major global risks. it's not just portugal and southern europe. u.s.-china relations have never been worse on the trade front. a number of issues in washington. all of these things are coming to a boil. when you look at charts, the guys are talking about attractive levels like freeport and u.s. steel but these things are broken. i don't think you buy these stocks at these levels. >> i want to get your perspective on the cds spreads blowing out around the world. are we in a situation where there is sort of fear a

it has since paid back the treasury with interest.ova scotia-born robert kelly, now 55, is the bank's ceo. after a career spent mostly at toronto dominion bank. he reportedly turned down the ceo job of bank of america last month. robert kelly, welcome. >> thank you very much, paul. welcome to our bank. >> reporter: first the president's proposal to tax the banks to get the money back from tarp. >> one of my worries would be that for the less healthy banks who are still trying to rebuild capital and profitability, will they reduce lending because of this tax? will they reduce the number of people they employ to help their bottom line? will they try to pass the costs on to customers? it doesn't feel constructive to me in many ways. >> reporter: what about the proposal to separate trading for your own account, like a hedge fund, from the deposit taking function of a bank that you can't do both? >> i don't think propriety taer trading was the essential problem with the economy. the banks didn't have enough liquidity. i actually think havi

at the imf to have the central bank governors and finance ministers, secretary treasury. now, what i saw when i was in government or plessala mabus chief economist of the world bank, that will often those ministries have a very little to do with the national interest. of those ministries start reflecting special-interest. so the u.s. trade representative and trade ministries and other countries get captured by particular special-interest. the finance ministries, the treasury reflects wall street and the similar financial institutions each of the country's. so that is how you can have the leader saying we want and need more regulation if we are going to prevent a recurrence and at the wto they are saying we have to push the agenda of the deregulation even though we have had the biggest race in the last 75 years caused by deregulation and even though the spread it around the world was facilitated by capital market and financial market liberalization. this is a special interest agenda. and i think in a sense this dissidents has brought home the extent of captured of these mi

the finance ministries, the treasury, with perhaps wall street and the similar financial institutions in each of the country's in. so that's how you can have the leaders say we want -- we need more regulation if we're going to prevent a recurrence. and if the wto says we don't have to push the agenda of deregulation even though we've had the biggest race in though last 75 years caused by the regulation even the spread it around the world was facilitated by capital market and financial market liberalization. this is a special interest agenda and i think in a sense this dissidents has brought home the extent of capture of these ministries and the difference between what is in the national interest and what is going on in these particular international agencies. >> host: and that is going to get perfect segue because we have to take a short break for coming back to talk about the difference between the bush and obama administration approach to regulation and also what can be done going forward. >> "after words" and several other c-span programs are available for download at podcast. more