"aig wants to stay alive.. what's happening is that investors are picking at the corpse of aig.. money flows into aig and it flows out to trading partners.. investment banks.. getting huge paydays.. paying their employees huge bonuses. " in aig's latest quarterly report issued in august... the company reported asset sales.. generating 4.6 billion dollars in after tax proceeds... during the first 6 months of the year... aig's asset sales have been slow... because of lower than expected values for its operations... and hopes are dimming that taxpayers will actually see the entire bailout money paid back. "do i expect the 180 billion paid back.. possibility.. but the interest behind it.. that remains to be seen... i don't see how that could happen unless the values spike and they can sell at a higher price " critics believe taxpayers.. will likely never get the best price for aig's assets. "if the 180 billion is ever paid in full.. it will be because the 180 billion in taxpayer money is disguised as profits at aig.. no they will not get paid back.. the only way is if they cook the b

to talk about the new ceo at aig. what kind of discussions have they had. what does aig need now. from hank greenberg's perspective. please help me welcome a long-time friend of glencoe baseball. a man who played second base here some 45 years ago. actually, 47. ladies and gentlemen, mr. larry mccarthy. amidst today's financial turmoil, our sophisticated wealth transfer strategies... and philanthropic expertise ensure your legacy... is passed on to family or your favorite pastime. ♪ northern trust. wealth management. asset management. asset servicing. . >>> welcome back. a your ago, the cards were starting to collapse aroundation. the insurance company reported an unexpected second-quarter loss of more than $5 billion on august 7th, 2008. a month later, aig received its first lifeline, a loan from the new york federal reserve. fast forward one year and what does the future hold for aig? joining me now is hank greenberg. of course, former chairman and ceo of aig. hank, always nice to have you on the program. >> good to be with you. >> before we get

and aig ceo being told n-o. this is "cnbc reports." >>> we're back with bulls and blares in quandary. money usually pulls out of one and into another. we asked, which one may be headed for a tumble. could someone toss me an eleven sixteenths wrench over here? here you go. eleven sixteenths... (announcer) from designing some of the world's cleanest and most fuel-efficient jet engines... to building more wind turbines than anyone in the country... the people of ge are working together... creating innovation today for america's tomorrow. thanks! no problem! >> an extraordinary thing is happening in the market. money flows out of one asset class and into another. yet lately, it seems like everything is up, way up. some experts say something has got to give. something has got to take a tumble. what's it going to be boys? first, guys. let me give you a few key numberser all right? first let's start with stocks. stocks are up 57% since the lows of march 9, right? but look at this. oil is up, too. boom. it's up 54% sinc

cassano traded the swaps trading desk at aig. he now looks likely to get indicted as a federal grand jury in brooklyn convenes. but even if cassano doesn't get indicted, i think he's a villain anyway. now, let'slook at tonight's hero of capitalism. drum roll, please. and tonight's hero of capitalism is -- robert benmoche, the new ceo of aig. many think he's too brash. he said attorney general cuomo doesn't deserve to be in government. cuomo hopes to imitate eliot spitzer and turn a crackdown on wall street into a run for governor. and we know how that turned out for spitzer. and cuomos a guy who fanned a near riot of outrage over aig bonuses then threatened to public the names of the aig execs who got them unless they return the money. benmoche was speaking up for his people. let the aig board fret over how blunt this guy is. i say that's what makes him a hero. any financial hero that can stand up and tell politicians the real truth stud a prized asset indeed, which is why i'm naming as hero of capitalism for the night robert ben

. >> but when you took on aig, what troubled you about it? what made you look at aig and say, something's wrong here? >> their fundamental accounting structure was wrong. and when we prosecuted them, we brought a case alleging that they had manufactured false, fictitious reinsurance contracts, it's a very technical issue. but they are false reinsurance contracts designed to create the appearance of capital on the books which was not there. and this was a structure that had been designed and orchestrated at the very top of the company. as we dug into -- >> so they were basically fudging the numbers to make it seem as though they had a stronger balance sheet than they had? >> precisely. that's exactly right. and the underlying effort was to create an illusion of financial strength that was not there. as we dug more deeply into the underlying structure and organization and accounting that was ongoing at the company, we knew there was a problem. and just parenthetically, four people have been convicted of this. the former ceo was called an unindi

. >> but when you took on aig, what troubled you about it? what made you look at aig and say, something's wrong here? >> their fundamental accounting structure was wrong. and when we prosecuted them, we brought a case alleging that they had manufactured false, fictitious reinsurance contrac s s, false reinsurance contracts designed to create the appearance of capital on the books which was not there. and this was a structure that had been designed and orchestrated at the very top of the company. as we dug into -- >> so they were basically fudging the numbers to make it seem they had a stronger balance sheet than they had. >> precisely. and the underlying effort was to create an illusion of financial strength that was not there. as we dug more deeply into the underlying structure and organization and accounting that was ongoing at the company, we knew there was a problem. and just parenthetically, four people have been convicted of this. the former ceo was called an unindicted co-conspirator in the federal courtroom by the prosecutor. this was

aig, if i were you, i would simply bang the market right here. worst case scenario, you break the short squeeze but aig still gets the money. they do this and that means the government, you and me, the taxpayer, finally has a shot of getting some of its money back. a. >> i always say there's bull market somewhere. i promise to try to find it for you. >>> feds may have a surprise september announcement to drain cash from the economy. barn burner on the economy recovery. the stock market keeps rolling. obama wants cap and trade. i don't. would you like to go for a ride on that bike ? ok ! ok. whoooa, heyyy ! see, the terms require that you keep the bike within this pre-determined space. if you want to take the bike out, i'm going to have to charge you a penalty. i can't really ride in this little space. you can't ride very far. even kids know an offer shouldn't come ha, ha, ha... with ridiculous conditions. why don't banks ? at ally bank our 9-month no penalty cd gives you a great rate with no fees for early withdrawal. it's just the right thing to

to aig. they did not comment on that story. they do not comment on market rumors. that mere rumor that aig may be preparing for a secondary offering may be felt in this stock price after 3:00, that sharp reversal after what has been a fairly decent two days for shares of aig. it is time for the "fast money" final call the dollar is lower after several days of gains. where is the dollar headed next? zach karabell, zach, was it three days the dollar was showing strength and we were slapped back to reality. >> i'm still stuck on the aig not commenting on market rumors. what else are you going to comment on? i think with the dollar there is a trading dollar and a fundamental dollar. and depending on where you are on that spectrum you can make mounds out of mole hills or not. what has gone on in the past few days is in the trading dollar phenomenon. a lot of people, currency dealers globally who will try to make incremental gains based on news headlines, the g-20 summit and the fed meeting, althou

owed from aig it has now shrunk from $182 billion to $121 billion. jon, do you think, though, that's just the capital market's improvement? can we trust that number? does it rise again? >> the answer is just as you led me in there, joe, thank you. that absolutely it's the capital markets improving. it's the credit situation improving. the same thing that was lifting the other stock that we talked about delta and continental. i mean, when you've got james grant of the interest rate observer saying that the credit markets are apparently freeing up to the point where people believe that these guys could put up some significant numbers, even a profit potential, jessup and lamont -- again, switching gears from aig to delta. jessup & lamont said they had a 30-cent loss for the quarter but based on the improving business environment and credit freeing up they think delta could actually put up a 5-cent profit instead of a 30-cent loss. that kind of stuff, joe, is all playing into exactly what you're talking about as far as the amount that aig owes, could be

at this point, aig is in the mid 40 range. i would watch it we're looking for another entry above the recent high of above 55. if that happens, you'll see another short sweep on the stock. >> damon, i'm reading that you recently predicted that the stock would go to 300? is that true? and how come? >> i think it has the possibility of getting there. we have no position in aig right now at all. scott makes a good point, that if it gets higher, we'll likely buy it and we'll likely buy it higher. our entry price would probably be above 50.23 on a close. maybe it happens tomorrow. if the stock closes above 50.23 by the close tomorrow, we will re-enter the stock. but -- it's purely technical, this is a hot potato. >> that was bhi question, do you believe in the business at all? because one of, one of the big criticisms of this company has been that they have a really unfair advantage. that robert ben mochet is a great manager. they brought him in after the company was practically burnt to the ground ahead of him. he's got some reall

at least when it comes to aig and lehman. something that i think could give them an open and shut case. it's pretty simple. i need you -- i need you justice guys to do this. i need you to go get the transcript of the early 2007 all day analyst meeting for aig. are you listening? take this down. i say this because whenever i came out and said that aig didn't have a clue about what it was saying or doing at any point after that day, which is polite in retrospect because the government was looking into deliberate confiscation. the company would fire back nasty notes to me for all the assertions i made that day. almost every single one of those assertions about aig's exposure made by joseph casano, who is the target of the probe, who ran the aig financial products division now looks suspicious. i never mind the justice department looking into everything, but any e-mails about what was going to be said at that analyst meeting and what the truth actually was i think should give them a slam dunk case. as for lehman, their actual inv

aig had people holding credit default swaps and they took no haircut. they ended up with money from the federal government 100 cents on the dollar. >> you understand that better than many people. it's sort of the tragic failure about the regime we came in with because we did not have the legal capacity to manage the orderly unwinding of a large, complex financial institution. capacity we have for small banks and tliferhrifts but not for ai. that forced us to do things -- >> are you saying you couldn't find a way to pay less than 100 cents on the dollar there but since you could find a way -- >> of course not. we would have done that in a second if we could have done that. but in deciding that default by aig would have presented the risk of further systemic damage to a very fragile system, we made the judgment to prevent default. by preventing defaults, we helped aig meet its financial obligations, not just people who brought insurance protection, but it's broad counter parties. if you think through -- >> but not the same for the auto industry. >> comple

we handed over tens of billions of dollars to aig. remember? the one that was already sort of supported by us? that money was supposed to be a loan. why is the government saying that they may never paid back, even as their stock is surging? this is my small-business specialist, tara. i know landscaping, but i didn't know how wireless could help my business. i just don't know how wireless can help my business. tara showed me how i could keep track of my employees in the field and get more jobs done faster. i was blown away. i'm blown away. only verizon wireless has small-business specialists in every store to help you do business better. we should get you a hat. now buy any blackberry, like the new tour, at our lowest prices ever, and get one free. boss: come on in, i had some other things you can tell people about geico - great claims service and a 97% customer satisfaction rate. show people really trust us. gecko: yeah right, that makes sense. boss: trust is key when talking about geico. you gotta feel it. why don't you and i practice that wit

the-of had the aig problem -- you might not have had the aig problem if the regulations were in place before. aig was not sufficiently collateralized and protect against risky given what happened. they thought they had no risk because they were so big and strong. they were not so big and strong. you had a problem. it is one of the areas i am sure that the progress is going to be made. but do you think the margin requirement to the collateral is sufficient or do you think -- >> somebody ought to be in a position to make sure it is sufficient. i'm not an expert. somebody ought to be deciding that. >> are there any collateral default swaps -- credit default swaps or other derivatives that should require interest by somebody in the transaction? >> i think this whole market need to be brought under surveillance. you ought to provide the authority to satisfy themselves so the market is sanitized. >> thank you. >> the gentleman from texas but the >> thank you. -- texas. >> thank you. looking back to your experience at the federal reserve, one of the things that is out there today is that the

i don't know if you can borrow aig at this point to get shorted. but 19 or 20 seems to ring a bell in my head in terms of that two for one. or the reverse splid, i apologize. that's where i think it's head, is 19. but i don't know how you can put on a position in this environment. >> if there was a day last week where you were on and john was on with you at the halftime report and you guys were talking about aig and suddenly the whole market started to flip. they started to sell the calls, buy the puts. somehow unbeknownst to everybody else the stock went from about 52 down to these levels here. looks like it's starting to move back to maybe this $15 number and it might come faster than people think. >> can you get a buy on these stocks? >> i'm looking at the options to -- the october 32 puts, for example, five bucks. the stock's got to go down to 27 to even -- to break even. that's a pretty dramatic move. that tells you that it's a tough call. >> next trade here, as oil rises above $71 ahead of that opec meeting tomorrow, fears of a fall outbreak

at least when it comes to aig and lemman. something that i think could give them an open and shut case. it's pretty simple. i need you -- i need you justice guys to do this. i need you to go get the transcript of the early 2007 all day analyst meeting for aig. are you listening? take this down. i say this because whenever i came out and said that aig didn't have a clue about what it was saying or doing at any point after that day, which is polite in retrospect because the government was looking into deliberate confiscation. the coup would fire back nasty notes to me for all the assertions i made that day. almost every single one of those asergs about aig's exposure made by joseph casano, who is the target of the probe, who ran the aig financial productions division now looks suspicious. i never mind the justice department looking into everything, but any e-mails about what was going to be said at that analyst meeting and what the truth actually was i think should give them a slam dunk case. as for lehman, their actual invento

i don't know if you can borrow aig at this point to get shorted. but 19 or 20 seems to ring a bell in my head in terms of that two for one. or the reverse split, i apologize. that's where i think it's head, is 19. but i don't know how you can put on a position in this environment. >> if there was a day last week where you were on and john was on with you at the halftime report and you guys were talking about aig and suddenly the whole market started to flip. they started to sell the calls, buy the puts. somehow unbeknownst to everybody else the stock went from about 52 down to these levels here. looks like it's starting to move back to maybe this $15 number and it might come faster than people think. >> can you get a buy on these stocks? >> i'm looking at the options to -- the october 32 puts, for example, five bucks. the stock's got to go down to 27 to even -- to break even. that's a pretty dramatic move. that tells you that it's a tough call. >> next trade here, as oil rises above $71 ahead of that opec meeting tomorrow, fears of a fall outbreak

aig had people hold their credit defaults swaps. we took no hair cut at all. they give us money from the federal government, 100 cents on the dollar, and i have to understand what they are different from one another. >> that is the tragic failure, because we did not have the legal capacity to manage the orderly unwinding of a large, complex financial institution. we do have a capacity for small banks and thrifts, but not aig, said that forces us to do things that we would not normally do. we would have done in a second if he could have done that, but in deciding that, we would have presented the risk of further systemic damage to a fragile system. by preventing default, we help them meet the immediate obligations, not just for insurance protection, but for broad counterparties. that is the consequence of that. and if you think through what happens when you let the default happen, you can look at the wake of the trauma caused by lehman's to fall to get a sense of the damage second cost, and that is why -- you can look at their default to see the damage that cos

, aig, aig, oh, and there's more. watch. >> my twitter board is about to explode. take a look at this. the beaner and the red neck. it's like a "sportscenter" moment, you and me together from the beginning and there's a lot more stay right there. >>> also who does the president have to do to turn things around when he talks to the joint session of congress tomorrow? for starters, can he explain exactly what is he wants? we're drilling down. >>> welcome back, i'm rick sanchez here in the world headquarters of cnn. sometimes we do a topic or an issue of a story that really riles people up. case in point today, this question about the president of the united states being refused by some parents to let their children hear him, certainly gotten a lot of response for it. we have told you we're going to be sharing some of this. let me take you right to the very top of the twitter board here if i can. and i'll take it to you right there, there we go, my first tweet ever is what this one writes. to sound off on this silly obam

. >> watch this, aig, who are you talking about? >> aig. >> aig, aig, aig. not. yeah, it's your turn to get involved. look at all the tweets we're getting on this. >> where are the people who bring you the tweets? >> myspace, facebook, take a look at this. >> i know, dude, how cool is this. >> laugh with, not at. >> i make fun of his people, too, though. >> i'm perez hilton, rick sanchez. i can be offensive. i don't have to be politically correct. >> the fact that you are a porn star. >> i might be a porn star, but i haven't done anything illegal. >> let me ask you a tough question. i know -- >> all your questions are tough. >> but this one is kind of really -- i'm cutting right to the chase, man. >> go ahead. >> if this thing doesn't get done this fall, after they come back from recess, is it as they say, curtains? >> however, my position is being usurped tonight. i will not be the emcee. rick sanchez will be your emcee tonight. >> porn stars and m.c. hammer, you got to love this show. this week rick's show celebrated its 100 anniversary. some of the highlights.

government was stepping in to save aig. the president heads to wall street, a major speech on the u.s. economy today. the markets at this hour, red arrows across most of europe and asia and u.s. equity features pointing to a lower start here at home. "squawk box" begins right now. >>> good monday morning, welcome to "squawk box" here on cnbc, i'm carl quintanilla, becky is on assignment today. our guest host this morning, peter cohen, the former lehman ceo, founder of ramius llc. great to have you on the program. >> great to be here. >> an appropriate morning for peter to join us. it's one year since lehman brothers collapsed, it changed the financial world forever. september 14th, 2008, lehman employees were seen walking out of the firm's new york headquarters carrying boxes unsure about what the future held on that same sunday b of a and meryl werill were working o deal of their own. >> i remember that. i want to talk to peter about a lot of things. spending the day with peter cohen, and i want to -- it's so hard to remem

i don't want justice to make the same mistake as aig or lehman. oild love to be brought in by both of them, really on both of these matters. i would like to be brought in myself. but at the very least, i hope to get their attention. we can't have the doj falling victim to the eye on the prize logic of the sec and have the prize turn out to be the wrong one, causing the government to lose what should be open and shut cases. just read the december analyst meeting transcript and look at the e-mails that led to what was said there for aig and simply look at what lehman was saying april, may and june to the analysts. you've got a closed case. the prosecution never rests, at least if i'm not on the team. >> i aim came back from vacation. there's always a bull market somewhere. i'll see you monday. >>> exactly the close today, it's a big stall. has america lost its vitality and optimism? or are we truly on the road to recovery?

aig is very strong again today. almost 9%. genworth, and citi, they think that stock is headed to 44. let's begin with mr. apple in midtown, scotty wapner. >> nasdaq off the best levels of the day. we've been outperforming the other major averages for much of this session. we're up about two-thirds of a percent. technology stocks mostly to the upside. apple turned negative, down more than 1%. you know about the big event out in california. the new ipod announcements, the price cuts and suf. perhaps investors were looking for a blockbuster announcement. that's why the stocks moved lower when they really didn't get anything tremendously new there. google higher, cisco higher. moving moving into the chips base today. this is about the lows of the session right now, down 7.5%. downgraded over at credit swiss today. the stock's been fluctuating between positive and negative territory throughout much of the session. sandisk off deutsche bank upgrade on improving demand is what deutsche bank was talking about. vivus pharmaceutical o

financial stocks struggled yesterday after one analyst said citigroup and aig shares were overpriced. citi was down 4%, aig lost nearly 10% after doubling in price last week. >>> disney announced a $4 billion buyout of marvel comics. the house of mouse hopes marvel's long list of bankable super heroes, that includes spiderman and the x-men will provide a boost to the market. marvel shares soared 25%. >>> also oil field services company baker hughes said on monday it would buy the smaller bj services for $4.8 billion. b.j. stock rose 4.1%, baker hughes shares fell 9.6%. >>> keep an eye today on ebay, the "new york times" reports the company reached a deal to sell skype to a group of privacy investors. >>> the bigger headline will be the institute of supply management manufacturing survey. that's expected to rise above 50. it's also an indication the economy's growing. >>> finally, a museum in amsterdam that houses the likes of rembrant has learned a treasured piece of moon rock is not lunar object, be just a piece of petrified wood. that means they've been paying premiums on a policy t

aig had people holding credit default swaps. they took no haircut at all. they ended up with money from federal government of $0.100 on the doll and i try to understand why those are different from each other. >> you understand this better than many people. it is sort of the tragic failure about the regime we came in with because we did not have the gal capacity to manage the orderly unwinding of a large complex financial institution. capacity we do have four small banks and thrift but did n have when energy like aig. thatorced us to do things like we would not ever want to do. >> are you saying you couldn#t find a way to pay less than $0.100 on the daughter but said said you could find a way -- >> of course the. we would've done that in the second ever could have done that. buin deciding that default by aig were represented the rest i can risk to the rest of a very fragile system we've made the judgment to prevent default it by preventing the falls we have aig meet i financial obligation. not just the people who bought injured protection, savings protectio

and also as the government reduced the interest rates, asking aig to pay on the loans issued to aig. fertilizers are active as well. we had negative comments coming out of caterpillar. fertilizer, pressure after potash said the third quarter is at the low of expectations. let's get a check on the nasdaq. >> we've been in a tight range. we have held on to more strengths than anywhere else. biofarm is strong, tech strong. google, 52-week high. pulled back a tiny bit from the high of $498 and change. up 1.2%. dell, we talked about it today. $30 a share. getting into i.t. services. down 4.4%. closer to some of its lower levels. ebay down 0.9%. i want to touch on yahoo! real quick. it has to do with ebay and google. ebay use will google and not yahoo! for its search ads. that under pressure today. underlying tech seeing a lot of strength. net app up 3.9%. molex, 5.6%. they raised their guidance. novellus is up. mr. hartman has given me so many names today, i think he needs his own show today. celgene is up. and by ohgen idec is up. charles schwab is up. let's go down to bertha. i'm sure y

gold is up, aig right behind me here. much of the financial sector is up. aig is up 11%. heavy volume as well. a government watch dog group saying is it it is showing signs of stabilizing. citi higher by 2%. singapores a largest sovereign wealth fund has reduced its stake by 57%. then bank of america. dick bove raising his confidence. let's talk about lows. that stock under pressure this morning. they reaffirmed their '09 outlook, which was fairly week weak and their 2010 guidance was at the low end of the range. the street is looking for 134. car max is up as its sales top estimates. let's go to the nasdaq. brian shactman. >> i'm going to go through things very quickly as we wait for the president. tech leader yesterday continues to be today. yahoo! up 0.8%. google up 0.6%. and research in motion up 0.6%. bing gaining market share. three months in a row. there's a note out of citi, saying there's a trading opportunity with applied materials. momentum as they trend toward profitability. we'll see what happens in 2010. story out of note of on i cconi. for mark echo's intel

aig was also active. a lot of volume there, above the ten-day average. on a couple of pieces of news, the gao issued a report saying it's questionable whether or not aig will ever be able to repay the loans it has with the government. at the same time the head of the house oversight committee, we should take a look at a restructuring proposal that has been issued by the company's former ceo on restructuring the government bailout are the insurance aig. a gain today on the session. bank of america active late in the day. close to exiting a loss sharing agreement with the government. this was never formally signed by bank of america and the government. the government, though, said it helped the company's shares. for the markets today, a mixed day with the dow off 41 points. nasdaq showing strength. i better turn it back to maria bartiromo. >> thanks very much. see you a little later, mary thompson. >>> the other business headlines we're following tonight. the fifth straight monthly gain, giving more indication that the economy is in fact recovering. some e

what happens to merrill lynch and aig. all of this happening so fast one year ago this week, regulators and executives needed to get news out before the asia markets opened for trading that sunday night. remember, here's what john mack and vick told me there week. >> the impact to me was really how bad or not how bad, how do you contain this contagion. and is there a way that you can build a buffer that stops with lehman, and clearly it didn't. >> finding a solution to lehman was important for confidence in the financial markets. and then we ought to do everything we can to ensure confidence remains, because ultimately it's confidence that drivesly quitity and capital access for all banks. >> of course, we are seeing confidence in the markets right now. of course, one year later we can look back and we can clearly see who saw the opportunities in that wreckage. bla blackrock's larry fink, goldman sachs, jamie dimon comes out a winner, and jpmorgan. and barclays was able to secure a solid foot hold in the united states by a

he was the analyst that downgraded aig. listen, the math just does not add up for aig right now. we've got a $15 price target. that puts it at 75 cents. right now they've sold about $9 billion worth of assets in a fire sale. they've got a long way to go to pay off the government. >> monsanto down for the week by 5%. pete. >> the ag players have done well but this isn't just a fertilizer play it's much, much more, it's a feed business and when they lowered their guidance for '09 and 2010 put a big pressure on the stock. that's a drop. >> and here's my favorite pop of the whole week. pop here for winkers. jane wells brought us this gem on they are cnbc "funny business" blog which i do urge you to check out. seattle diner william jones has created jeans that appear to wink as you're walking away. but you have to be willing to pay. pairs cost anywhere from $160 to $580 a pair. >> is that you? >> it's not me. >> apparently, you need to have a real tight, muscular butt. >> i think the bigger the better based on the eyeballs. >> we need to stop right now. >> that was my point. >> if you

aig, the stock we've been watching for months. u

well, you know, aig was bailed out. there was not a lot of discussion this week about all the companies that we've bailed out. yes rs we did bail out aig, but there's $180 billion yet to be repaid. >> yeah. it will be interesting to see how much of that we get back. thank you for joining us. >> a republican on the house financial services committee. >>> up next, stocks on the move and which ones to watch this afternoon in the trading. >>> plus, the grass may not be greener for much longer. big government turf wars could be coming. we'll be right back. i've been growing algae for 35 years. most people try to get rid of algae, and we're trying to grow it. the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels... that we could someday run our cars on. in using algae to form biofuels, we're not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well. we're making a big commitment to finding out... just how much algae can h

aig had people holding credit defaults, and they took no hair cut at all. i am trying to understand why those two are different from each other? >> you understand this better than any people. it's a tragic failure about the system we came in with. we did not have the legal capacity to manage the orderly unwinding of a large complex financial institution capacity we do have for small banks. that's forced us to do things that we would not ever want to do. >> was that answer satisfactory? >> well, that answer was deeply distressing. it's the acknowledgment that the financial institutions got a nice, warm, generous treatment, whereas manufacturing industries, jobs on the line and bond holders and investors in that industry really took a smack. i think the problem has been all the way through this crisis that the banks have been treated generally, and everybody else has been treated pretty tough. >> startling statistics. in 2009, 89 bank failures to date. and only 11 in 2002. and tax revenues dropped because of the collapse. it dropped 16.2%. total jobs lost sin

we were watching aig, citi, bank of america, they raised the price target there. take a look at what is happening. dollar weak and commodities are higher. take a look across the spectrum, the miners, oil stocks as well. freeport-mcmoran and u.s. steel and murphy oil. aig heavy volume after a government watchdog group says it is stabilizing. citi is higher. bank of america

aig received $182 billion in federal funds. even with the uncertainty company shares shot up 20% on monday. a congressional committee said it would examine a plan to reduce the government's stake in the company. >>> bank 6 america started the process of paying back its billions in federal aid. the bank says it will return $425 million for unused guarantees against losses. a company spokesman says the next step, they will start repaying $45 billion in taxpayer money which could begin within months. >>> falling airfares have not been enough to revive the nation's airlines. an industry trade group reports a 21% drop in passenger revenue in august compared to the same month last year. the 10th straight decline. the cost of flying down, an average of 17% last month but the number of passengers declined as well. >>> the michael jackson movie "this is it" will get the worldwide red carpet treatment. the documentary based on concert rehearsals will have simultaneous premieres in more than 15 cities around the world on october 27th. it

we're taxing grandma to bail out aig. >> you make good points about excessive risk taking. first of all, let me concede to you. the unfortunate proliferation of t.a.r.p. money. unfortunately most regrettably, anti-capitalistically does give government a shot at the pay caps for those t.a.r.p. firms. i agree with that. but the fed is talking about 5,000 banks. and soon those t.a.r.p. firms will be de-t.a.r.p.ed. leverage ratios. the sec failed to enforce lerch borrowing ratios. that was the problem, not compensation. and secondly, peter, capital reserves are too low. so we need less leverage and more capital to stop excess i risk taking. and finally, the goof ball, stupid dumb bow rating agency that signed off on the mortgage-backed pools and the cdos, right? they're the ones to blame, peter, yeah? it has nothing to do with pay. >> don't forget the fed, easy money. >> do i get a chance or are you two just going to gang up on me. >> i don't see the link to compensation. >> we rewarded people on the volume of loans so they did any kind of loans they could. we wrote swaps on to

banks own a majority of the general motors and nearly 80% of the insurance giant aig. in our new pole, 65% of americans surveyed say they've been hurt financially by the meltdown. 47% say someone in their household has taken a pay cut, been laid off or lost a job in the past year. so that is where we begin a special series that will run all week long "from wall street to main street, where things stand." in the past year, the unemployment rate reached its highest level in 26 years. nearly 6 million americans lost their jobs. and it is with some of them that we met this year that we begin. here's betsy stark. >> reporter: when we first met olympia rovino, she had lost her job as an executive assistant at a pharmaceutical company and she was fear. >> you worry. >> reporter: today, one year later, she is one of 15 million americans still looking for full-time work. >> those jobs i posted for. >> reporter: has applied for hundreds of office jobs. but the only offers have paid less than what she gets on unemployment. you were worried, will i be able to survive? what's the a

and credit derivatives were really behind some of the biggest failures, in fact, the aig collapse. so we see no new regulation on that. there have been proposals but nothing has of course been instituted. that market remains the same and sort of unchecked. and we see no change at all in the credit rating agencies and the oversight of them. and really i think they are at the centre of this problem where they really rated securities far too high. said that they were way less risky than they ultimately turned out to be. so that also is a change that we have not seen anything about. >> reporter: all right, robert glauber, do you see changes that address the kind of problems that lead to the financial crisis? >> well, in terms of the risk behavior on wall street, gretchen is right. leverage is down but the aggregate risk isn't down a wol lot at all and that's quite surprising. i think one of the reasons is quite ironic. because the government is a good job of preventing this from becoming a total catastrophe, memories are very short. and these people who basically live off of risk, this

you said if you had to buy anything it would be aig or short term aig paper or its subsidiaries because it was yielding 10% to 15%. a couple weeks ago on fed day, what's your best idea now? >> well, the aig investments have done well. the stock's doing better and the bonds are doing much better t n than -- let me move on and suggest that in this new normal world of slow growth and low inflation that there are attractive aspects of the long-term u.s. treasury bonds to the extent that we might have and pimco is beginning to explore this possibility of a double-dip in the economy in 2010, then the long bond at 413, 414, 415 begins to have some attraction. one last point. when you look at u.s. treasury market, you can basically see there is not much room for short rates to move lower. the fed's as low as it's going to go. if we have a slow-growth economy this creates a bull flattener for 10 and 30-year treasuries. >> when you say explore the idea, what are you saying there? are you saying that your view at pimco before in terms of how you were investing was not for a double dip? you didn't

we did do the aig loan. because they do help troubled institutions, the concern that the load of those that are not trouble is that they will be lumped in with the -- the concern with that of those is that they will be lumped in with those that are troubled. >> there has been some disagreement on whether not this is the first time the fed opened a window to the investment bank. >> the federal third -- federal reserve opened up 13-3 not to investment banks. >> in the 1980's. >> in never opened the window in the 1980's to anyone. the next time it may be available in the 1960's. they did not actually use the authority again until right before bear stearns with the facility. >> i am sure you understand the concern has the look at the extraordinary actions of the federal reserve in regard to bear stearns. one thing that i have wondered is whether congress should revisit and tighten up the language of 13-3. the federal reserve seems to have the power to do virtually anything with no restriction whatsoever. would t

aig had people hold their credit defaults swaps. we took no hair cut at all. they give us money from the federal government, 100 cents on the dollar, and i have to understand what they are different from one another. >> that is the tragic failure, because we did not have the legal capacity to manage the orderly unwinding of a large, complex financial institution. we do have a capacity for small banks and thrifts, but not aig, said that forces us to do things that we would not normally do. we would have done in a second if he could have done that, but in deciding that, we would have presented the risk of further systemic damage to a fragile system. by preventing default, we help them meet the immediate obligations, not just for insurance protection, but for broad counterparties. that is the consequence of that. and if you think through what happens when you let the default happen, you can look at the wake of the trauma caused by lehman's to fall to get a sense of the damage second cost, and that is why -- you can look at their default to see the damage that cos

the sales might hold its right arm into the air and slapped larry, i have aig on the wire and what you know, the aires zeller. give me a bit on 5 million. i need a bit right now. for a split-second i hesitated and mike yelled, they got 5 million to o. that is when i called, 16, 18 and the moment these words route of my mouth, lehman brothers was committed to an 800,000-dollar purchase, a 5 million bonds at 16 cents on the dollar. you are done i said, snappin up the traders no going back phrase in confirming our fipst trading in delta was cast in marble. i heard mike fire out his own confirmation to the customer. okay you are done, 20 seconds later we got hit again. terrence tucker on the line, where ar you one dealt that? 5 million knapik o these people were desperate trying to get rid of their holdings in the bank. i called the same price, 16 but the words are hardly out of my mouth when we gotit again for another 5 million again instantly had drpped the price, 15, 17 andur client did it. maybe they would settle at 15 i thought that they ner did. our best dressed bond sales in diva ca

but you're in good health and you're enjoyingfishing and y play aig role and you're joying respect... >> i tell you, i feel olderthan i used to be. rose: well, inetably you're older than you ud to be. >> sure. >> rose: but not as bad as you might. obama, he says to you "paul, what about invasion a lot of people tell me i oughto be worrieabout inflation." >> you ought to . you ought to be perpetually woied about inflation. you kn, the administration is perftly conscious of the fact that they've got aig problem if inflation gets out of hand and they say "our hands are tied now, we can'tdo anything now, unemoyment is appaching 10%, the econy is weak, there isn't apparent inftion problem at the ment, pces are ne and stable." but you've got tha yawning budget deficit. you've got portion of the dollar, we've g to be careful about this. but it's a problem for at least a yearout, two years out, three years out. now, i think it's fair to say they say that, buif you have no action, howoes that become credle? and it's very hard to make a credible... maket credible if you're notoing to raise taxe

lehman brothers, merrill lynch, aig, washington mutual, wachovia. a week before this began, fannie mae and freddie mac had been taken over by the government. other large firms teetered on the brink of insolvency. credit markets froze as banks refused to lend not only to families and businesses, but to one another. $5 trillion of americans' household wealth evaporated in the span of just three months. that was just one year ago. congress and the previous administration took difficult but necessary action in the days and months that followed. nonetheless, when this administration walked through the door in january, the situation remained urgent. the markets had fallen sharply. credit was not flowing. it was feared that the largest banks, those that remained standing, had too little capital and far too much exposure to risky loans. the consequences spread far beyond the streets of lower manhattan. this was no longer just a financial crisis. it had become a full-blown economic crisis with home prices sinking and businesses struggling to access affordabl

still ahead, what should aig's next move be? find out on cramer's eureka moment. all coming up on "mad money." you're the colon lady! diarrhea, constipation, gas, bloating. that's me! can i tell you what a difference phillips' colon health has made? it's the probiotics. the good bacteria. that gets your colon back in balance. i'm good to go! phillips' colon health. >>> tonight i'm giving you what you want. i know that. i know, just talking with my staff, i know this is what you want. so we're just going to do it. we've got eight big ipos set to price in the u.s. this week. other shows talk endlessly about them, but they won't tell you what to do with them. that's why you come here. it's my job to teach you how to evaluate these new filings, how to also try to be conservative to try to make you some money in them. what a revolutionary idea. the profits will be televised. tonight i want to take a look at -- i'm cautious. this is such a hot company. i've got to be very careful here. tonight i want to take a look at a-123 systems. it's a battery company, which everybo

they didn't. >> or aig. >> well, aig they probably did. >> they didn't know how to wind it down. >> maybe they didn't know exactly what aig was doing. credit swaps with a ridiculous premium. >> aig regulators, too, everybody said it was somebody elsed job. >> they were regulated. none of their insurance companies have been in trouble yet of the company, the parent company was in troubl, obviously. the government owns 79% now. but no, it's a tough question. but i think the regulators right now have the power to regulate the banks. i'm sure they will use it. >> they are not even minding themselves. the fha is 50 to 1 leverage, twice what an investment bank had had. yet its portfolio is deteriorating. there are all kinds of delinquencies coming in as we sit here. l you look at that. you look at fannie mae and freddie mac, government regulation hasn't kept them from making mistakes the private companies made. >> now they are stepping it up because they are the last resort. >> well, they were under tremendous pressure also from certain congressmen to lend money to people, so everyone had their

his proposal would codify, would put into law the misguiding policy that allowed the bailouts of aig, bear stearns and others. so while the president lectures the financial industry it is, in fact, he who has not learned the lessons of the last year. and not until we stop enabling financial recklessness with a taxpayer license will we see the financial system acting with the discipline and the responsibility that we all seek. our proposal is a positive solution, i'm proud to stand with my colleagues on the financial services committee who put forward a solution that is based in fundamental economic principle and fundamental american principles. i'm pleased to yield back to senator bachus. >> thank you for those thoughtful remarks and all our members. we're going to take questions at this time, and i'll refer those questions to different members. >> [inaudible] thomas green, the name of an antitrust lawyer who's gone after companies like microsoft, and the tobacco industry. i don't know if you're familiar with him, wonder if you'd like to comment on that selection. >> well, he's from c

we have some laggards like aig in the financial services sector. s&p 500 is higher by seven points, the nasdaq on pace since 2003. gold, oil, commodities on the upside. matt nesto is sheer. >> three days up. i have been noticing this is a streakish market because in mid august we had the eight-day rally, remember that? we had four days down and three days back up again. certainly the market gets in these directional momentum things. one thing to remember unless the dow gets above 9600 we are stuck in this trading range, 30 points, 40 points, the dow up 42, up 50 before i came back downstairs. consistently all day it has been the story of energy, materials and industrials. if you look within the dow, the big leader has been ge. great for people like us but the reality is it is not really an index mover in terms of the dow. that will move the s&p 500 but because of the low share price it can't push things. the best performers, alcoa, chevron and prokter & gambel. chevron, exxon, very, very powerful in the market. pivody, transocean. material names, p