suzanne pratt reports. >> reporter: of the five u.s. banks downgraded by moody's, citi, j.p. morgan chase and bank of america deal directly with consumers. today, people were still trying to figure out what the move means for them. >> i'm familiar with the issue. i just read the headline l+s1 night. i wasn't that concerned until now. >> yeah, it's kind of scary, like i wasn't expecting to hear that. >> actually, it doesn't really change anything. you're not really making any money. >> reporter: experts say there's no reason for consumers to fret about the safety of their money. what they should be watching is some companies have already estimated the downgrades will cost them billions of dollars. and, the banks might try to make up for the lost revenue by passing costs on to customers, either in fees or higher interest rates to borrow money. >> what's happened at these banks is profitability has been under pressure. and, as profitability has come under pressure they are looking to try to get fees where they can to offset loss of profits in other areas, whether it's this deriv

but the u.s. bank seems to be wrapped up for at least the past year or so. >> when you look at banks and financials in general, the macro environment rae really does matter. it is going to be a problem for the big u.s. banks as well. wu i think if i becomes a problem it's less of a problem. you actually get some upside potential in u.s. banks because they are trading a lot like european counter walter parks. but they are looking much better on a capital front. they have taken the majority. we're estimating almost 90% of crisis losses have already been realized and we're starting to see the u.s. banks gain market share from some of their specific european competitors. there has been anecdotal conversation about that for a while but we are starting to see data now. >> so the bottom line here is that you are actually optimistic that something will happen. >> it woultd be nice if i could say that i had something that the rest of the world didn't have. but at the end of the day i keep hanging my hat on. the

u.s. banks did not create your mess. you did. u.s. not grant craid to grave government protection unsustainable decades ago let alone today. you did. u.s. banks didn't make austerity a foreign concept in europe. you did. u.s. banks didn't force public work torres tire at age 52 or refuse to ask them to contribute so much as a single euro to the healthcare benefits or the prescription drug benefits or their ridiculously and unaffordable spousal and kid benefits. you did. you created the safety net. and now you are throwing us under the net? i don't think so. we are many things in this country, but even our most gullible institutions aren't half that stupid in this country. we have enough time cleaning our financial messes without having to take the blame for yours. we are knee-deep in our own entitlement which look spartan compared to yours, by the way, to even remotely take the fall for the sham of a system that is totally yours and getting much worse every day. our politician might have been late for that accounting class. but you pat

u.s. banking system so you're saying banks are ill prepared but there isn't the political will to prepare them more for the kind of risk we could see from the euro zone for example because there's this whole political rhetoric out there that the u.s. is on the up and not that it's recovering that banks are getting better by downgrades we just look at jamie done in j.p. morgan chase for example with the narrative used to be that j.p. morgan chase. this was a really well run organization and jamie dunn was a great risk manager then they had this whole will trade and suddenly everyone said wait a minute maybe that is not true the reality of course we know is that these net these these these accounting gains that these banks have been making are based on on the provisioning that is on lowering their loan loss provisions and the question is is is this a prudent thing to do at this point in the cycle are we moving towards a recession and if we are lowering their provisions then we're going to see it going forward so it's that sort of thing i mean the narrative in the banking sector is the world

u.s. banking industry. and then weather satellite program. the u.s. supreme court will hand down its ruling on the constitutionality of the health care law. we'll be live at the supreme court as the decision comes down and to get reaction. our coverage begins at 10:00 a.m. eastern here on c-span 3. the house will vote on contempt of congress charges against attorney general eric holder. watch live house coverage on c-span. >>> next, as part our spotlight on magazine series, former merrill lynch and bank of america representative sallie krawcheck joins us. from washington journal this is 50 minutes. >>> we continue with our spotlight on magazine series. today we're going to talk with sallie krawcheck. joining us from new york city. we caught the attention this article that you wrote in the harvard business review. you speak about four ways to fix banks. i wanted to read the first paragraph, and get you to respond to one of the central parts you're making. it's tempting to view the downturn as a closed chapter, whose primary causes have been resolved. p

banks a lot more money. try 18 billion in leveraged loans. that is more than double the amount for all of last year. john, you say this could eventually put u.s. taxpayers at risk. how so. not because of the lending to europe but the banks are a protected class. you are asking people to be regulator it is to over see the greatest minds on earth. this is not capitalism. this is the opposite and we don't allow failure anymore. >> rick, it happened before where they are paying off foreign banks, is it going to happen again? >> i seriously doubt it my interpretation varies. i am shocked. and thank goodness. we don't have to worry about it. get the provision and it will all be good. and i am concerned about europe . the world is awash in dollars. europe has a boor business plan and not liquidity . the leveraged loans are going to formula one. and i am more worried about the federal reserve. >>> and all of those problems. do we want to rick our money. it is not a disaster . and they are not as innovatative and they are better capitalized. every bank is too big to fail and too politically connected to fail. you require them to have more than they do

like u.s. bank, et cetera. where else can you make money? >> bell well, i believe up over 3% when we came on the air, stt. i don't own that name right now but i have been in and out of it on a weekly basis. when they are out of favor, that's one i buy when they dip. as far as just quick judging with big hedge fund sold a ton of xlf calls. so to the point a moment ago from risk reversal wheb you look at somebody that comes in and sells 14 puts, these are just out of money. and they sold 104,000 of those. that's 10 million share equivalent they are basically saying, i'll take it, i'll buy it if the slf slips to there. they obviously don't think it is going to 14 so they put the spread judge. add big credit for doing it. that a massive trade. big bet that they have indeed bottomed or for the next 27 some-odd days will move higher. >> if it continues to be positive and trickles out, you have to believe that's a positive. a net positive for financial stocks in general. this is the final trading day of the quarter as we said up next, we continue t

u.s. banking system. listen in. >> we are not through the banking crisis. banking crisis is going to continue to grow. just because of the government's micro man knowledaginmanaging. s is spreading ing ting to ins companies. >> with the financials weighing on the market in the months ahead daryl jones says you can count on it. michael farr says no chance. is there a crisis brewing again in the banks, do you think? >> we definitely think we are very negative on the financials and key issues we see with the financials are -- number one, economy is globally is bad and getting worse. always negative for the financials. number two, when downgrades happen in the banks and this has happened and will continue to happen, it increasing counter party risk chuck is negative for the financials and then the third thing which michael farr commented on a lot is the european banking system is a complete disaster. this whole banking system is interconnected to the extent europe can't solve liquidity problems in the banking system it will be bad important the u.s. banks as we

morgan and u.s. bank. also with the prior agreement of the water enterprise. as it relates to the bank hundred protection, that is an important thing. they provide us with the ability to terminate the agreement. i want to pause here to reiterate the importance of adequate bank ratings. you may have heard about moody's downgrading several banks last week. we have an agreement with bank of america for $250 million, not what is before you today, but for the water enterprise. because of the downgrade, the provision allows us to terminate the agreement. we're currently looking for a replacement credit facility with another bank and will report back to you on replacement alternatives. i want to show you how all diligently are being to keep an eye on these ratings and the action that will take to fix those ratings.

u.s. banking system. i would just point out just a couple of numbers for you. in the last 12 months the u.s. stock market return of 6%, a little less after today. on the other hand european stocks are down 24%, and if you live in greece you're down 70. so over the last 12 months and even if you look over this last period of weakness the u.s. has been viewed as the best of shelter from this storm. and so we are working with clients to help them understand that. >> susie: andrew, we have to leave it there. thanks for coming on the program. we've been speaking with an grew-- an grew-- andrew goldberg of jpmorgan strategist. >> susie: a big roll out of new products new products from apple today. mobile maps, higher-powered laptop displays, a big like for facebook. those are just a few of the new products and services apple c.e.o. tim cook announced to developers in san francisco. leading off apple's new product rollout: a new macbook pro featuring a super sharp retina display. it comes at a price though at $2199. the high-end laptop is one of the thinnest on the mar

u.s. banks were punished in after hours trading. now the european bank board, we're looking at again, deutsche bank down. let's get out to jeff who has been catching up at the st. petersburg forum. jeff? >> good to see you. we have some real big hitters. i have to say we have the conversation prior to that moody's cut in rating so bear that in mind as you listen to this clip, but we asked about this issue of capital constraint in the banking system, what's going on in europe and how does that compare with the united states. let's just play you a little clip of that interview. >> tremendous uncertainty. not just europe but a result of some of the european uncertainty. growth is slowing down around the world. the u.s. deficit question that has to be addressed by the end the year, early next year. on top of that a question on the johnson banking system. is it too large, how does it shrink. there are things going on in the middle east you have to watch for because they can affect the price of commodities. this is a year not only do you h

keith banks, president of u.s. trust. keith, nice to have you on the program. what was your take on this big selloff today on wall street? >> well, you said a lot of the factors that are driving it, right, we've had nothing but a confluence of negative news that seems to be getting more negative. we have a debt crisis brewing in europe and it's really impacting economic growth there, and more recently the news coming out of the u.s., whether it's labor, manufacturing, housing, all surprising to the down side and people are now worrying about the health of the economy, even the u.s.. >> susie: and they're also beginning to talk about recession in the u.s.. what are your thoughts on that? >> well, we don't see a recession in the u.s.. what we see is a deceleration of growth. so we think for the rest of the year we'll see between 1.5 and 2% of real gdp growth in the u.s., but we think between the impending election in november and the fiscal cliff issue at the end of the year, we think things are going to really begin

banks. there is a growing concern that the u.s. treasury will try to bail out the eurozone directly through the exchange stabilization fund or indirectly through the international monetary fund. the fed has a challenge as well, explaining to a skeptical congress why traditional currency swap lines with european central bank will not turn into an indirect bail-out of eurozone countries. at the same time the european economies are weakening growth is slowing in both china and india. given the prospects of a global slowdown, some economists are speculating that the federal reserve may initiate a third round of quantitative easing. during the questions i would like to discuss with you whether and under what conditions the federal reserve would consider launching a third round of quantitative easing. it's my opinion the fed has done all it could do and perhaps too much. further quantitative easing won't stimulate growth and create jobs, there exists a real risk that the massive amount of liquidity the fed has already injected into the e

bank. volumes down 40%, europe as well, in the u.s. we know it's low. a pure investment bank like morgan stanley can't put up the numbers they need to. they have got, i wouldn't say balance sheet issue, credit. morgan stanley the cream of the crop but to me can't get away from the contagion on the stock price. i would stay away from financials. >> not to cast aspersions on goldman sachs, i think brian did this morning. when goldman put morgan stanley on their conviction buy list, down 30% since. can you ask the question what's not to say it won't happen again with jpmorgan. >> not a guarantee. >> no. i think that's worth pointing out. pete talked about jpmorgan last night thought it was set up nicely given the way market traded yesterday in the stock. i will come back to this. i think the only bank to own in this environment u.s. bank corp., a stock that continues to trade around a 52-week high while the rest flounder. >> i was going to bring that up next, kramer was talking about that on "squawk on the street." he likes u.s. bank and it would be the one

jpmorgan the derivative trades made by a group part of the u.s. bank but apparently all booked in london. do you as the u.s. regulator have full access to the information you need trading act tivgty conducted in london if carried out by u.s. bank and what more needs to be done to improve coordination with international regulators to prevent these kind of cross-border losses? >> the london operations at jpmorgan are conducted through a branch of the united states national banks. so in terms of jurisdiction, we have clear jurisdiction over the activities of that branch. in the case of jpmorgan chase, those activities are managed on a global basis through the new york office where we have the majority of our core staffing at the occ. >> okay. good. all right. third question. it's about early warning systems. traders at several hedge funds, we've read in the newspapers, have been able to spot the jpmorgan trade through its ig regular impact on the market for credit driv tiderivatives. begs the obvious question. why didn't the regulators know? obviously reg

u.s. banking system secondly markets have to be convinced that the reason actually solid funds the why she supported guaranteed these people banks so you need to be always on the upside and no one knows frankly with one hundred million euros will be enough until the stress tests have been completed when that happens the mark will make a judgment as to whether it's sufficient or not over the more funds will be required but this is the right priority of the moment go large go big and convince the markets that you're there to support the european banking system what do you make so far of the efforts which have been made in order to resolve this crisis wastefully we have a g eight meetings g twenty summits which result basically in nothing but well are fortunate americans aren't convinced the moment there is a plan now i think there is a plan at the moment there's a lot of technics going on it negotiate is like a chess game for the chess going to go to the end and the need to be subsides you lives made to get rich markets this problem being solved in the short term it's only when that happens

economy, the state of the u.s. banks, and the state of the u.s. debt markets compared to those in europe, you would think that europe would have an easier monetary policy than the u.s. and it's the other way around. >> reporter: tomorrow, u.s. fed chairman ben bernanke appears before congress. markets hope he'll give some hints about what happens next with u.s. rates. suzanne pratt, "n.b.r.," new york. >> reporter: i'm darren gersh. still ahead, jobs and the presidential election in the key swing state of virginia. "nightly business report" is brought to you by: captioning sponsored by wpbt >> tom: as investors shrugged off worries about europe's economy, they got better news on the u.s. economy. the federal reserve's beige book survey of regional economies painted a more upbeat picture, saying overall the u.s. economy is still expanding at a moderate pace. the report shows manufacturing expanding among most of the fed's 12 regions, between early april and mid-may. travel and tourism were also strengthening, the housing market continues to show si

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would exclude from the crisis reform statute derivatives transactions between a london branch of a u.s. bank and offshore entities right once again at the end of the quarter when jamie diamond aims to manufacture a loss means to reach into that pool of off balance sheet offshore derivatives trading what the now lobbying to be exempt from. the kind of reporting standards call that loss out of magical thin air of derivatives dark exchanges and dark pools it a winds up on his balance sheet suddenly and now he has no taxable gain so it's a slush fund is what it is and they want to legalize the slush fund and the ponzi scheme steal from the savers gut the manufacturing and force people into situations where they are indentured servants because after all that's what the queen would prefer isn't it and we must back before the queen she's our monarch down low or she doesn't want to work but borrow too we die because we're indentured servants on her for complaint tape. when is sid vicious going to come back and you know thing about this properly don't test almost. a report thank you don't go away muc

scheduled to appear before the community and they created new questions about the risks taken by some u.s. banks. the bank has taken steps to make sure this problem is not repeated. >>> today we'll see the largest internet address system since it was created. they will announce new domain names. there are 2000 proposals submitted. they want google dot you tube. and we could see other choices as well. how many others years ago we didn't know what l-o- l-was and now we have dot l-o- l. >>> if you are driving any time soon, i think you will say, o- m-g, it is clear out here. yes, it is. let's take a look at westbound 880 if you are heading to the mcarthur maze, it is moving very nicely and you will like this heading to the toll plaza as well which very light. northbound 880 traffic looks good all the way up to downtown oakland. and the morning drive northbound 280 is very nice all the way up the highway 17 and we are off to a great start. hello steve. >> sal, t- t- l. talk to you later. my dad is probably, what the heck does that stand for? drizzle is coming in and pam said it was intermit and it o