warren buffett. they will tell you now that they are just like "on the tren -- "auto tred " magazine -- "auto trend" magazine. you should order these in your mind from the riskiest to the less risky. it is much more serious than that. they are a federalese sanctioned enterprise. -- a federally unsanctioned enterprise. how much they have to reserve against each asset is based on the rating. the rating is bestowed on that asset by moody's and standard and poor. it has a huge affect on the ability of institutions to hold the securities. a triple a rating is what the federal government has. it is what the u.s. treasury has. there were triple a ratings on piles of mortgage bonds. there were aaa ratings placed on hundreds of billions of dollars of bonds. they did not just decline in value, then went to zero. the ratings ended up meaning nothing. >> if i had a mortgage -- the likes goldman sachs sales it to ikb. they think they are being really smart. >> all along, i am starting to not be able to pay at som

today he is the warren buffett of short sellers. at the time, he was a short seller that not many people knew. in fact, was not doing so well because he was betting against the market when the market was still going up. >> rose: and the reason everybody knows him now is because when he bet against the housing bubble... >> he did very, very well. >> rose: better than anybody, as far as we sglochlt absolutely. >> rose: so therefore he had a big name. >> and that's why a lot of people look at this case and think that this is... hindsight is 20/20 and an easy case to make now. but i do think there are serious issues, as michael said. >> just to back away from the lawsuit for a minute and look at the deal. it's riveting. i don't know whether what they did was illegal or not but it should be illegal. >> rose: (laughs) >> it's indefensible what they did! that senate a room with someone... with the person they knew who knew the most about the underlying securities and he picked the absolute worst ones and then they presented it to this enti

when he talked about we should not be paying for warren buffett's retirement, what he is talking about is the idea that we should not pay of full social security for people at the top of the income scale. that is a fundamental reinvention of know what social security has three doing for a generation. -- what social security has been doing for a generation. when he talks about playing the granny card, any time you get people proposing anything like this, politicians on both sides say, you are going to hurt granma. historically, it has been a loser to offer any kind of change. >> this party seems to have a real challenge on the issues of debt and spending. you mention a number of races coming up in indiana. how interesting will they be for the parties? >> that is a good question. it is one of the first states with returns to come in, so on election night it is often looked at. you have an early primary, so one reason it will be interesting to steve -- to see is the republican primary for the open senate seen at after bayh

i want you to think more about warren buffett and benjamin graham and not so much about jerry falwell or the ayatollah khomeini. that means i believe the best way to divine where a stock should be going is by analyzing the facts about the underlying companies and its future, the prospects. now, i'm always telling you to do your homework, and that means, again, reading the company's earnings releases, going over their s.e.c. filings, and by far the most important, listening to the conference calls. those quarterly conferences are available everywhere now. all this stuff, i know, part of the boring, even quotidian, to use an s.a.t. word, side of stock detective work. it's the basic just the facts, ma'am. a little "dragnet" style work. you can't do without it. sorry. but just because the fundamentals tell the most important part of a stock story, that doesn't mean they're the whole tale. there are other ways of unraveling the truth about a stock's trajectory, and they're worth heeding. here's one. since the show began, i didn't used to talk about it. but during that great crash i spoke a

and warren buffett owns part of moody's? >> right.ody's is, i think, its biggest shareholder is warren buffett and s&p is owned by mcgraw-hill. so the public -- they're both public corporations. their job has been -- they see themselves now they will tell you now we're just like auto trend magazine for car buyers. that we're just journalists. we give our views about the relative trustworthiness of these various securities, relative likelihood they're going to repay. these ratings were taken far to seriously. they were just meant as a kind of suggestion about what the like -- not the likelihood they'd default but suggestion of the way you should order them in your mind from riskiest to least risky. and what -- but their place in the world was actually much and is much more serious than that. they are -- they're federally sanctioned enterprises that banks have to reserve capital against their assets. and how much they have to reserve against each asset depends on the rating of the asset. and the rating is bestowed on that asset by mood

warren buffett himself once described derivatives bought and sold with little oversight as, "financial weapons of mass destruction." that is why, through reform, we would help ensure that these kind of complicated financial transactions take place on an open market. because, ultimately, it is a marketplace that is open, free, and fair that will allow our economy to flourish. we would also close loopholes to stop the kind of recklessness and irresponsibility that we have seen. it is these loopholes that allowed executives to take risks that not only endangered their companies, but also our entire economy. and we're going to put in place new rules so that big banks and financial institutions will pay for the bad decisions they make, not taxpayers. simply put, this means no more taxpayer bailouts. never again will taxpayers be on the hook because a financial company is deemed too big to fail. finally, these reforms hold wall street accountable by giving shareholders new power in the financial system. they will get a say on pay, a vote on salaries and bonuses awarded to top executives, and

that's the line that warren buffett said.o some degree, when individuals and consumers stop spending, when businesses are pulling their horns, when everybody freezes like a deer in the headlight, you could ride that out without any governmental intervention. there are free market philosophers who say that is the right thing to do, but it's extremely painful and very few governments are willing to suffer the pain to be pure. >> it's not a leading indicator. i'm not sure the dow is much of an indicator of anything at all. >> reporter: their big disagreement is how long the good news will keep on coming, because thornburg is saying there's one thing things are looking up. it is this, the stimulus measures that were signed into law. they worked. they put money into our pocket. they kept the auto industry going. but that money is going to run out and then what. >> have we fixed the problems in the long run? the answer is absolutely not. the consumer too much leverage, spending too much. the housing market, millions of units that a

warren buffett warned about derivatives. weapons of mass destruction.i talk to some of the top investors bill gross is the bonking in california. and he said you know, derivatives are what i do. i could do about my investors don't want me to do so much of a. it's true, a lot of investors are wary of the credit default swaps, these derivatives investment and they eventually helped lead to the downfall of aig so there is reason to be wary of them. but john paulson threw himself into learning about them. and the ins and outs of an pellegrini as well. the thing about credit default swaps is they cost money as i said. they are like an insurance contract that they were dirt cheap. in 2005 they were dirt cheap. in 2006 also. and yet, no one else was behind too much. but john paulson came from this other world. here he is, big words about housing and pellegrini tells them about the credit default swaps and he says wait a second, my downside is like 7% of them might upside is hundreds of% a year. that's how they work out the tree. why isn't every doing this trad

but, if you are warren buffett, and you get most of your money from dividends and capital gains, you do not pay medicare cat -- medicare taxes on that. you are eligible for it, he will get the same benefits as anybody else, but because your source of income is what is called on earned income, even not have to pay. i am thinking to myself, how is it that the guy who was cleaning up the office is paying the medicare tax and the guy who is making capital gains is not? what we said was that if you make more than two hundred thousand, 21 $50,000 the year -- slaughtered $50,000 a year, that is on earned, you should have to pitch in like everybody else. you will be using it like everybody else. it is a concept of fairness. now, what the congressional budget office -- i am sorry. these answers are long sometimes. i want to make sure that i really answering your question. i really want to respect the importance of your question. with the congressional budget office has said is that as a consequence of the savings from the waste and fraud, combined with the new revenue sources that i just ment

their total direct compensation -- let's see, warren buffett with $100,000. steve jobs at apple, $1. kenneth lewis at bank of america, he took no pay at all. and john mackey of wholefoods took $1. what is the advantage of taking these small salaries in the beginning and then going for the big payoffs at the end when their companies do better? guest: 1 cents, it does a line there -- in a sense, it does align their fortunes with the shareholders. but you have to remember, some of this is good pr. you've got these tiny packages being taken by people who work founders or co-founders, who owned huge chunks of the company already. not taking cash is not really very much sweat for them. or you have people like ken lewis, who in fact, was ordered by the government to give back what he had already made and stop taking pay for the rest of the year because, thank you very much, the rest of america was already bailing out his company. host: back to the phones. we're talking to joann lublin about ceo pay and perks. the next call is from michigan, mary, go ahead. caller: t

and warren buffett has warned about derivatives, weapons of mass destruction.nd i talked to some of the top investors and why they didn't do this trade. bill gross is the bond king out in california. derivatives aren't what i really do. i could do it greg but my investors don't want me to do some of it. investors are a little wary of credit default swaps. these derivative investments and they eventually helped led to the down fall of aig and there's a reason to be wary of them but john paulson threw himself into learning about them and the ins and outs of them and peligrini as well. and the thing about credit default swaps as they cost money. they're like an insurance contract and they were dirt cheap. in 2005 they were dirt cheap. in 2006 also. and yet nobody is behind too much of it. john paulson just came from this other world. here he's this merger arb and he has vague worries about housing. he said my downside is 7% or so -- and my upside is 100% a year. why isn't everybody doing this trade? and it's sort of a question mark i kept asking. and unfortunately

treasury secretary henry paulson talks about his new memoir "on the brink" with berkshire hathaway warren buffett. he talks in response collapse. this event was part of the greater omaha chamber of commerce 2010 annual meeting. >> well, hank i want to thank you for coming us. you honor us. i should declare right off the bat that i am a friend of hank's. i have been so for some years. i admired him before he took the job. i get my ear him a lot more after the job is done as the secretary of the treasury. the name of this book is "on the brink," and that is 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 we were fortunate as a country to have in place. we had hank, we had been bernanke, we had tim geithner and sheila bair the head of the fdic. i really -- i know a lot of people in finance and a lot of people in business, i know a lot of people in 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 a fashionable

and essentially the market is saying it is now safer to loan to warren buffett than it is to the united states government. mr. geithner disagreed with that conclusion or that assessment. i would just ask you your view because i don't know what else it could mean and also ask have you ever seen this in a bond market? what does this say about our fiscal outlook? >> it is very unusual certainly. there are a number of possibilities. the one you raise is one possibility. although if the u.s. government is not paying off going to be a huge amount of economic dislocation that would affect everybody. i think one of the issues recently has been and this would be consistent with what you're saying is that the u.s. government's very large debt issuances have been very large auctions with lots of borrowing going on has put some pressure on the normal purchasers of that debt and they had a preference for diversifying0 into corporate debt as you described. >> but let me ask you about that because the federal reserve in one analysis i saw purchased a staggering 80% of the one and a half trillion of de

the most famous is warren buffett. he's been seeking a provision that would ensure new capital requirements would not apply to existing derivative requirement. he's one looking for changes in that considered legislation. >>> kansas city fed president tom hoenig says the u.s. should lead the way on reforming financial regulation. speaking at a conference on monday where he said regulation could make financial systems stronger and make banks more globally competitive. industry leaders have argued reform would raise the cost of doing business and give overseas banks an edge. >> he didn't exactly say how, though, right? like everybody wants health care reform, but did they want what we got? that's probably a negative. >>> financial firms aren't the only ones watching negotiates in the senate. an article in today's "new york times" outlines concerns. more than 130 retail and manufacturing sectors have retained lobbyists on the issue. this is the same story i read last hour so i'll read it. mars wants to be able to play deri

as warren buffett reportedly once said," only when the tide goes out to you discover who has been swimming naked." what is this apply for a central bank that wants to limit the development of such baubles. the first conclusion is assessing whether there is a bubble or not. because there is an innovation, asset the value should rise but not by how much tax is difficult to assess what the new approach re-evaluation is after an abortion valuation. consider the questions that might have risen relative to the bubble. what is the internet mean for technology investment. how many new start-ups will prosper. ? how fast will internet traffic growth and for how long? similar questions arose with respect to the recent housing bubble. how much will subprime lending increase the demand for housing and how this will increase the demand related to prices? what will the default rate bay? what is the appropriate correlation rate between a different subprime mortgage rates and assessing the value of collateralized debt obligations? how are such correlations likely to differ in a bold vs in the bust. this un

i find it wrong that to have a situation where warren buffett, who has been before this committee, and he tells us that he pays a lower effective tax rate than does his secretary. this is the third richest guy in the world, $40 billion. does that make any sense at all? we have a situation where last year, exxonmobil, the most profitable corporation in the history of the world, not only did not pay any federal income taxes but actually received a text on last year in part by setting up tax shelters in the cayman islands and i recall that chart you have of the thousands of companies that are crowded in one building there. when you talk about investing in america, i think that is a good place to get the money. >>>none of my republican colleas are here but i find it amusing to say the least that without exception, they tell us how serious the deficit situation is. i agree with that. they have voted to repeal the estate tax. virtually, every republican voted that way. when you vote to repeal the estate tax, what you are doing is over a 10-year. providing $1 trillion in tax breaks to the top

that's what led warren buffett to describe derivatives bought and sold with little oversight and financial weapons of mass destruction. >> now i would be willing to bet most people out there, christine, know more about derivatives than they think. in the financial sense they're bets. they're bets on the future price of this or that, of corn or oil or the risk of something happening. like a hurricane, for instance. why am i telling you this? reckless trading in derivatives tied to the mortgage crisis helped turn a downturn in the u.s. housing market into a full-blown ka as it photography from which we're still roving. aig, bear stearns, synonymous with the meltdown and a good chance derivatives are at the core of it. >> ali's not exaggerating this by a conservative simt of the u.s. treasury, some $600 trillion worth of derivatives held by invests as we speak subpoena look how that compares with the entire growth of the global economy. the output for the world, gdp, is only $60 trillion. only $60 trillion. ten times the global economy. >> i have to say, christine, i don't know if had the sam

where people say you can never be wrong with coke, it's got a good yield, it goes up over time, warren buffett. i like the more exciting stocks, but excitement if you want to you go to the phillies game this weekend. i think it's a fine stock. i'm never going to try to talk anyone out of that one or pepsi or general mills or kellogg. it's good to have one of those stocks in your portfolio. i want to circle back to ohio and go to bill in ohio. bill. >> caller: hello, bill. first-time caller, long-time viewer. >> well, terrific to have you, pal. what's up? >> caller: hey, i really enjoyed "getting back to even," especially the two chapters on options. thank you very much. >> those were very hard. i'm glad you liked it because those were the most difficult two chapters i've ever written in my life because i'd never written about options before. this is a big option handbook. what's up? >> caller: my question is on domino's pizza with the positive commitment to improving the brand and just opening 9,000 stores, improved product selection, is this going to be a catalyst for growth? >> just a sec. y

believing in the roosevelt plan for economic recovery he shifted from being a speculator to being a warren buffett-likeng-term investor. bought a whole lot of blue chip stocks at the lows. he actually bought them on margin. i'm not recommending that. [laughter] >> guest: by the mid-'30s, was worth the equivalent of $30 million today. >> host: so he rode the market up? >> guest: yeah, exactly. >> host: the other part of this that is, i think, painful obvious from the book in that i think it has become painfully obvious to people today is how global the economic system was then and certainly is now. is it more global now than then? did people realize then how interconnected these pieces were? and do you think people realize adequately now how much the connection between the u.s., europe and asia has really become part and parcel of the system? >> guest: yeah. i mean, it is more global now. the central connection then was, you know, europe and the u.s. first of all, we've got many more players. i mean, we did have

warren buffett called it the instruments of financial mass destruction if there's not transparency around it. >> not a little bit of transparency around it. so do they have the provisions -- i should note senator dodd the chairman and senator shelby ranking republican member are negotiating as we speak. as they continue those conversations do they have agreement on making this more trance parent and less -- not less risky for an investor but more open to an investor who says if i'm buying one of these here's my risk? >> no, they don't have agreement but they're much closer to having agreement than the public debate suggests. this is one of the areas where democrats and republicans many agree needs to be more trance parent and they want to get there. and the idea that it's far away is -- they can get there. they just have to negotiate. >> the fact that blanche lincoln, the chairman of the agriculture committee. this is her jurisdiction. she is going to formally start to move this process on derivatives forward tomorrow morning. she said today in a press conference that she has the commitme

warren buffett said in 2006 "newspaper readers are heading into the cemetery while non-newspaper readers just getting out of college. it's hard to make money buying a business in permanent decline." >> well, i think whole media sector has been overrated for a couple of years. at the moment it is underrated. >> rose: even though the stocks have been down. >> yes, but... >> rose: you know. that. >> charlie, let's simply look, for example, at our company. i mean, give me one minute for kind of show off presentation. i need to do this because it puts everything a little bit into proportion. for me, the year 2009 was by far the happiest year in my professional career. this was the year that i love most. why? because in a very, very tough environment, we had to deal with the financial crisis and we had to deal with the structural changes, the fundamental changes of the media industry. we achieved a high two-digit e.b.t.a. margin. we achieved in the traditional newspaper business an operational e.b.t.a. margin of more than 20%. at the same time, we were able to grow our digital revenues of the

for example, warren buffett takes an income of $100,000 a year so even if you tax him of 100% of its income, it would not make up for all of the wealthy is avoiding in his taxation. in general, i cannot say to tax a bank or not. in fact, i think everybody is taxed barrett and equally in the united states. that is a very complicated issue. but i was refering really to the cause of the financial crisis, and i think the senate committee really has not focused on the rights issue. the right issue is that people, institutions are allowed special privileges if they hold securities that are rated aaa and the rating comes from a monopolistic the credit rating agency. if you think about it for a second, look at the big investment banks such as bear stearns, lehman, goldman sachs, morgan stanley, and merrill lynch. when they bought securities in the mortgage market, they did not rely on the ratings. they used their own judgments, their own internal things. and look at what happened -- some of them failed and some are still alive. that would have happened if it had not been rating agencies and

did you see that goldman sachs' problems are for you extending to warren buffett? pat, they're bringing them all in. >> uh-huh. >> i'm not saying warren buffett's in trouble. i'm saying everybody's going to get snarled. >> goldman sachs aren't the only ones to probably think up this outstanding idea here. >> no. the boys at merrill lynch and a couple other bank -- >> getting close to home. >> it is. i have to say, mika, we got a lot of e-mails yesterday about the tim geithner interview. >> i did, too. >> a fascinating -- >> i watched it again. >> we all did. and i didn't until i kept getting all these e-mails where they said he didn't answer the questions. and i think there was a question about whether he really knew what was contained inside the bill. andrea, does this suggest that maybe this is still a moving target? >> oh, it is. >> negotiations are still going on? tim geithner came on here and wasn't ready to commit on what this bill might be. >> i don't think he wanted to blow up talks between senator shelby, on the republican side, chris dodd and with the neg

warren buffett, in a sense, was a better investment than the united states. well, why is that? it's because the world is beginning to view that the united states can't manage its financial markets, it can't manage its debt. places like brazil have had their stock market increase 100% in the last year because they're now seen as a better investment than this country. so, mr. president, we can't wa wait. we can't wait six months from now, a year from now, two years from now. in fact, perhaps the time has already gone too far. so i make this point of order today, pursuant to section 4-g of the statutory pay-as-you-go act of 2010. i raise the point of order -- the presiding officer: the senator's time has expired. the presiding officeroh, sorry. mr. lemieux: raise the point of order against the emergency designation in the pending substitute amendment and note, mr. president, this is not a budget point of order, it doesn't kill this provision, it just requires that it be paid for by the end of the year. everybody's for extending unemployment compensation. everyone's for paying for

>> i think the greatest thing warren buffett ever did was to buy dairy queen. it is just delicious. the children's miracle network. what are you doing in a nut shell? >> we're visiting 25 cities all across north america in honor of our 25th birthday and we're raising awareness and funds for children's miracle network. >> testify's given over $80 million to the children's miracle network.given over $80 million to the children's miracle network. where did your bhlizzard go? >> all empty. >> let's look at the forecast and see if there's a blizzard anywhere else across america. thank you so much for coming children's miracle network and dairy queen. let's hit h the maps and see what's happening. not a lot of snow at all. in fact, you have to head to the northern rockies where you're getting a little bit of flurry activity. here in the northeast, a little gray and soggy. it may be shrug lish lushish to. augusta looking gorgeous. much of the rest of the country >>> south miami middle school, thanks for coming today. that's a quick look at your weather picture. harry, inside to you you. >>

where is warren buffett?ho can they bring in on the outside to help validate what they're doing >> in omaha. >> but who is somebody they can bring in on the outside and confirm what they're doing is not wrong. now they have a fraught complaint against them. they need to invite the media in, create a bank of good will and stop this man behind the curtain that has been part of the reputation for so long now. >> seems like ft. knox. we just got a letter out from paulson and company out to its investors, basically outlying the entire media debacle for its investors. it's clear here, it's on the front page of the money investing second in the "wall street journal." should goldman do something similar? >> i think we've all been to this movie before. goldman will be dragged before congress before you know it primariry because they have a communications problem. they should do something similar. i think frankly, arrogance got them to where they are today. arrogance got them there. hub rans is keeping them there. i th

charges, allegations, a board member at goldman sachs passed on insider information about that warren buffett deal. we have mary thompson here with the latest on this. can the reputation of the firm survive? >> it's an interesting question. you know, legal and governance expert that cnbc spoke to has been calling goldman's handling of its problems subpar while criticizing the board for its silence. michael says well not devastating yet. over time it could hurt goldman's brand, as well as its business. >> boards and ceos and cfos are fairly risk averse right now and couple that with the aggressive marketing that goldman's competitors will be doing and i think that's a recipe for long-term damage. >> ford motor company and blackstone chairman said they will be remaining clients but more voices need to be added to that chorus and that goldman needs to be more vocal, too. it denied that fraud charges detailed why it believes the charges are false and sending lloyd blankfein and its army of oothers to testify before the senate on tuesday. still too many say it's not enough. the firm's board needs

entirely different tone and they're taking a lesson from warren buffett and going straight to their shareholders. >> they're talking to an audience here of government regulators, shareholders and clients and they're making their case to them and i thought really rather well. >> investors and clients have done really well. >> now we're done and we can move on. grilling greenspan. there i am on the housing bubble. >>> plus -- >> at the auction. steve liesman live from the citi trading floor capturing all the action around today's ten-year note auction. the last few have been big flops. today's interest rate is key. >>> then cnbc plays toxic avenger. we're buying a toxic asset and carefully deconstructing it to see what the experience is like and what we can learn. let's just hope we all don't grow a third eye. >>> volcker pushing a back tax. states raising more income taxes. where is it going to end? all that plus the fast money halftime report. >>> welcome back to "power lunch" phil dudley making a significant speech about the role of fed policy and asset bubbles and he's saying, yeah, we know it

warren buffett has called derivatives and i quote, financial weapons of mass destruction. many have argued that these instruments or responsible when the economic crisis in the united states. our goal today is two better understand derivatives so we can ensure that they do more good than harm in today's global economy. we experienced in the impact of unregulated derivatives and how they are still recovering from a. aig was unable to pay out on insurance on residential backed mortgage securities and the effects on counterparties was massive. this broader country to the brink of collapse and a lack of transparency was a major factor. we are now watching the risk of derivatives play out when it comes to sovereign debt to. as this chart on the left shows, the net national amount of cds from greek debt which represents the bed on greeks ability to pay as well over 8 billion. which is quite large compared to the 300 billion of outstanding debt increase. in contrast the cds on u.s. debt which is in the trillions is only one-quarter of the size. today there are 1.2 trillion outsta

that is what led warren buffett to describe derivatives that were bought and sold as financial weapons of mass destruction. that's what he called them. and that's why reform will rein in excess and help ensure that these kinds of transactions take place in the light of day. now, there's been a great deal of concern about these changes. i want to reiterate. there is a legitimate role for these financial instruments in our economy. they can help spur investment. and there are a lot of companies that use these instruments to that legitimate end. they're managing exposure or currencies and fluctuating markets. for example, a business might ed hedge against rising oil prices by buying a financial product to secure stable fuel costs. so, an airline might have an interest in locking in a decent price. that's how markets are supposed to work. the problem is these markets operated in the shadows of our economy. invisible to regulators and invisible to the public. so, reckless practices were rampant and risks accrued until they threatened our entire financial system. that's why these reforms wer

as warren buffett once said, only when the tide goes out, do you discover who has been swimming naked. so, what does this analysis apply for central banks that might want to limit the development of such baubles? the first conclusion is essentially whether there is a bubble or not into the sides -- and where the size will be challenging with innovation -- with innovation, prices should rise. consider the questions that might have risen relative to the technology bubble. what is innovation mean for technology investment? how many new business start-ups will survive? is amazon rare? how fast will internet traffic growth and for how long? similar questions rose on with respect to the housing bubble. how will this increase in demand translate into prices? what will the default rate be on subprime mortgages once the demand growth slows? what is the proper correlation rate in terms of loss experience between different subprime and all day mortgage pools that should be used in assessing values of collateralized debt obligations? and how are such collateral as agents like the two differ in a

i find it ron that you have a situation where warren buffett who has been before this committee, he tells us that he pays a lower effective tax rate than does his secretary. this is the third richest guy in the world. somebody tell me that that makes any sense of all. i have a situation where last year, exxon mobile, the most profitable corporation in the history of the world not only did not pay any federal income taxes, but received a tax fund last year in part by setting up tax shelters in the cayman islands. i recall that lovely chart with the thousands of companies. a little bit crowded in one building, there. when you talk about investing in america, were we getting the money? that is a pretty good place to start. none of my republican colleagues are here. but i find it a little bit amusing to say the least, that without exception, they tell us how serious the deficit situation is, and i agree that is a very serious problem. and they have voted to repeal the estate tax. and i right? i believe virtually every republican voted for that. the vote to repeal the estate tax, over 10 years

vote, democrats agreed to kill a provision from a derivatives portion that would have helped warren buffett's berkshire hathaway avoid a big financial hit. they write -- we have philadelphia, mississippi, on the independent line. good morning. caller: it is just a matter of both sides being too cozy money- wise. earlier you mentioned $30 million over the past 10 years. but until we get the lobbyists and the money men out of this -- the main street people have a voice, this will never change. thank you. host: chicago, mary, line for democrats. caller: you read from "the wall street journal." that is the rupert murdoch paper. he is the main one pushing hatred and vitriol. when people say both parties do the same thing. all you have to do is go to senate.gov, you will find of the vote on repealing glass- steagall, republicans owned the house of the senate and clinton was president and you had 45 democrats in the senate and 44 of them voted no, the one that voted yes was hollings, a conservative from south carolina. all republicans voted to repeal the last-steagall. -- glass-steagall. host: the f

i find it ron that you have a situation where warren buffett who has been before this committee, he tells us that he pays a lower effective tax rate than does his secretary. this is the third richest guy in the world. somebody tell me that that makes any sense of all. i have a situation where last year, exxon mobile, the most profitable corporation in the history of the world not only did not pay any federal income taxes, but received a tax fund last year in part by setting up tax shelters in the cayman islands. i recall that lovely chart with the thousands of companies. a little bit crowded in one building, there. when you talk about investing in america, were we getting the money? that is a pretty good place to start. none of my republican colleagues are here. but i find it a little bit amusing to say the least, that without exception, they tell us how serious the deficit situation is, and i agree that is a very serious problem. and they have voted to repeal the estate tax. and i right? i believe virtually every republican voted for that. the vote to repeal the estate tax, over 10 years

and i think this was quite famous and observed that weeks before that we did a transaction with warren buffett where we gave him equity warrants on a substantial portion of goldman sachs i

that is what led warren buffett to call derivatives as financial weapons of mass destruction.em. that is why reform will rein in excess and ensure that these kinds of practices see the light of day. there are a lot of companies who use these instruments to legitimate end. a business might hedge against rising fuel costs. they can rein in a decent price. that is the way markets are supposed to work. the problem is that these markets operated in the shadows of our economy, invisible to the regulators and invisible to the public. these practices were rampant. risks accrued dangerously. i was encouraged to see a republican senator join democrats this week on this issue. [applause] that is a good sign. with that action, we will continue to see what highly leveraged and loosely monitored gambling in our system. third, this legislation would enacted the strongest protection devore. -- strongest financial protections ever. [applause] this financial crisis was not just the result of decisions made on wall street. it was also a result of decisions made at kitchen tables across america.

and a number of people over the years, warren buffett among them, has tried to change that, compensation model on wall street. let me tell you, if i may, how compensation worked for me. i spent nearly 30 years with the citi and its predecessors, and over that period of time, certainly when i was an executive with the company, we were paid in fair amount in stock with the company. more than half of our pay was in common stock of the company. and for a period of time, we were required to hold 75% of the stocks we received. in other words, we couldn't cash it out. in my case, i held 100% of the stock, not the 75%. our rules also provided that you have to hold the stock as long as you were with the company. you could sell it when you left. in my case, i held the stock the entire time. as i sit here today, i hold virtually every share of stock i acquired over a nearly 30 year career. and i have watched it go from $50 a share to $30 a share, to less than 1 dollar a share. so in my case, i think my interest were a line 100% with stockholders. i watched the great majority of my personal net wort

. >> moving on -- >> the warren buffett of politics.off a turnip truck on the way in. in fact, that's why i'm dressed like this. >> that would explain it. >> i was shoveling turnips. >>> >>> astro physicist stephen hawking shares his belief there really is intelligent life out there. the show gives viewers a glimpse hawking's imagination where alien existence is, quote, perfectly rationale. hawking warns against seeking out extraterrestrial life -- >> don't do that. >> we should ask them for their papers. >> hold on. stay off the roof of the building with your telescope. >> i had that penciled in at 1:35. >> don't try to talk to them because -- >> anyhow, apparently, it can be dangerous. >> what do we have? >> i feel weird reporting on that. i don't believe it. >>> coming up next, it's called the toughest antiimmigration law ever. we'll go inside the arizona immigration controversy with telemonday dough's jose diaz-balart when "morning joe" continues. smart...you're staying at this resort for free? how? welcomerewards from hotels.com. s

that is what led warren buffett to describe it as financial weapons of mass destruction. excess and help ensure these kinds of transactions take place in the light of day. there has been a great deal of concern about these changes. there is a great role for the financial institutions in our economy. they can spur investment, and there are people who use those instruments for legitimate manners. a businessman hedge against rising oil prices by buying of financial products to secure stable fuel costs, so an airline might have been interested in locking in a decent price. that is how markets are supposed to work. the problem is these markets operated in the shadows of our economy. invisible to regulators, invisible to the public, so rampant -- service threatened our financials -- so risk threatened our financial system, and that is why this will prevent reckless risk-taking. that is why we want to insure product like standardize derivatives are traded out and open in the full view of investors in those charts with oversight, and i was encouraged to cease -- and those charged

and a number of people over the years, warren buffett among them, has tried to change that, compensation model on wall street. let me tell you, if i may, how compensation worked for me. i spent nearly 30 years with the citi and its predecessors, and over that period of time, certainly when i was an executive with the company, we were paid in fair amount in stock with the company. more than half of our pay was in common stock of the company. and for a period of time, we were required to hold 75% of the stocks we received. in other words, we couldn't cash it out. in my case, i held 100% of the stock, not the 75%. our rules also provided that you have to hold the stock as long as you were with the company. you could sell it when you left. in my case, i held the stock the entire time. as i sit here today, i hold virtually every share of stock i acquired over a nearly 30 year career. and i have watched it go from $50 a share to $30 a share, to less than 1 dollar a share. so in my case, i think my interest were a line 100% with stockholders. i watched the great majority of my personal net wort

that is what led warren buffett to call derivatives as financial weapons of mass destruction. that is what he called them. that is why reform will rein in access and ensure that these kinds of -- ran in excess and ensure that these kinds of practices see the day of light -- the light of day. there are a lot of companies who use these instruments to illegitimate and. -- legitimate and. a business might hedge against rising -- legitimate end. a business might hedge against rising fuel costs. they can rein in a decent price. that is the way markets are supposed to work. the problem is that these markets operated in the shadows of our economy, invisible to the regulators and invisible to the public. these practices were rampant. rick'sks approved dangerously -- risks accrued dangerously. i was encouraged to see a republican senator join democrats this week on this issue. [applause] that is a good sign. with that action, we will continue to see what highly leveraged and loosely and murderemonitored gambling in our system. third, this legislation would enacted the strongest protecti