Transcripts For FBC Varney Company 20130227

Kid did nothing. Warner not that i know of, not to deserve that. Imus deserve it . Something precipitated this violent act by the psycho coach. There has to be an excuse, right. Imus you know, trying to get Willie Nelson paul simon tried to get Willie Nelson to record this and he passed on it. But they finally recorded it together though. Imus in the morning one, two, three seconds. That is an extra 120,000 add today our debt. Yeah. New incredible numbers everyone. Now its ten seconds. 370,000. We knew it was bad, but this bad . Let me spell it out. 37,000 a second. 136 million an hour, 3. 2 billion a day. Thats how much the debt piles up. But the president says if we make a tiny cut planes are delayed, meat not inspected and children not vaccinated and quoting the budget director our ability to forecast Severe Weather is seriously undermined. On friday, the president inflicts that maximum pain. By friday night well be another 10 billion dollars in debt. Since we started this morning, 30 seconds ago, were a million more in debt. Right . Yeah, Varney Company is about to begin. Wednesday, february the 27th. Jam packed with three big stories and three allstar guests. First, the president does the not have to inflict the pain he threatens from spending cuts. He has the power to switch the cuts to nonessential areas, but he wont do it. Armageddon is pure politics. In the next hour senator tom coburn is with us, and ill ask him what he thinks of the president choosing to inflict maximum pain. Now, can we call this the walmart economy . That company struggling because you have less money in your pocket. Youre paying more for gas and now, food prices are going up. Art laffer has more on the walmart economy coming up. This man sounded off and french workers, saying theyre lazy and entitled. What does he think about big labor in the u. S. . The outspoken chief of Titan International, the top of the ten oclock hour, now, listen to this, this may be the exact opposite of the entitled generation, one young man, he walked ten miles in the snow so he could apply for a job that pays 7 an hour, a real good story, you will hear it, hes here on Varney Company. Art laffer coming up next. Weve got another rise in gas prices and weve got the opening bell. How about this, since the program started america is another 25 Million Dollars in debt. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermon to testdrive the market. All on thinkorswim. From td ameritrade. Just announced, the president will meet with congressional leaders friday. So, on the day that the cuts go into effect, that follows the week during which the president has campaigned against the cuts, railing about armageddon, if the cuts go through. But congressional members on friday. From nashville, art laffer, always a favorite guest. All right, art, is it really, really a catastrophe, armageddon if we cut 2 from spending on friday . No, its not. In fact, it will probably help the economy, what would be an armageddon or what would be closer would be if they raised taxes again, thats not the right answer. Okay. But its not armageddon. The skies are the not going to fall on the next week or the week after that, not going to happen . Even though i look like chicken little, theyre not going to. Hold on a second, the the max plank institutes in germany, studying longevity says that 72 is the new 30. How about that . I love it, i love it, i love it, i love it. Stay there, 72yearold, well be back in a second. Now, the opening bell is coming up in just a moment and in the back drop to the bell this morning, weve got more testimony from ben bernanke, likely to be a repeat performance from yesterday, where he said, yes, hes going to keep on printing. We also have a 5 drop in durable goods orders, and that was pretty much expected, its a big drop though compared to what we had in december. If you look at the indications before we start trading, were expecting a pretty flat opening and maybe a slight upside bias and we closed 13,900 so were taking it from there in the early going, down a couple of points, up a couple of points, i mean, this is not a trend by any means, were dead flat thus far, okay, thats where we are. Ive got more big numbers though and theyre from priceline. 6. 5, a billion dollars worth of bookings on its website in the last 13 weeks, now, thats a lot. And now, im guessing nicole that stock is a big winner today . It is, im looking at it here and checking it and its up. 47 . The biggest online. And they did well internationally. When youre booking your trip, you think of priceline and the stock obviously, a stellar performer. Thats a gain and a half, isnt it . 4 on it. All right. Thanks, nicole. Hold on a second. And bring you the big names that are moving. Pure speculation, but said apple up late yesterday and stocks split, talks, went the rounds and Shareholders Meeting today in california and thats 137 billion dollars in cash that theyve got on hand. Thats going to come up at the meeting. Down a buck in the opening bell, opening minutes. Boeing, pension demands off the table in the contract talks and that stock is holding there at 76 a share. I want to talk about coach. You know i call it democratic luxury and that stock this morning is up, lets bring back in nicole. How far. Nicole its up about 3 for coach. So now what theyre doing, theyre hiring a former nike executive to oversee the tran formation, and thats up 3 1 2 , thats a good mover for this morning for the retailers. And the dow is still down, down about 11 points. Stuart yeah, its pretty flat. 11 points not a big move on 13,000 index well keep an eye on it. Thanks, nicole. Bring back in art laffer, please. First of all, art, i hope youve recovered from the max plank study of longevity. That was a compliment, i hope you took it the right way. Thank you very much. Stuart just for a second. Listen to what president obama said about taxing the rich during what i call a Campaign Speech yesterday. All were asking is that they close loopholes for the the well off and the well connected for Hedge Fund Managers or Corporate Jet owners who are doing very well and dont need these tax loopholes so we can avoid laying off workers or kicking kids off head start or reducing Financial Aid for college students. Stuart art, weigh in, what do you make of tax increases to avoid armageddon. You know, thats a really not the way to go. What you want to do is create Economic Growth and the way to get the tax revenue increases, if you want more revenues you cannot do it by trying to balance the budget on the backs of the poor or unemployed and those people not earning much. You really need prosperity to get your revenues up and not willing to go that route. If he made it that they got rid of the deductions and loopholes and lower rates im all for it, but thats not what hes doing, trying to get he to one side and not the other. Earlier this morning, ive got to say i was shocked he when i saw the debt numbers, how much were piling it up per second per minute. 37,000 a second. 2. 2 million a minute. 136 million per hour, 3. 2 billion a day. And now, it occurs to me to ask, is that hurting our economy right now . Not moving towards a debt crisis in the future, but right now, does it hurt . Of course it does. Its a huge hurt. Its a classic sign, stuart that we are way underperforming our potential and you know, what we need to do is get this economy growing, get people off the welfare roles because they have good, high paying jobs, get people back in the tax roles because theyre making more money, not because they tax them at higher rates. Thats what we need to do. This is the poorest recovery in the u. S. History. It is as far below the next worst as the next worst is below the best and its a tragedy, whats been going on for the last five years and frankly i dont see any way of stopping it not with these policies. Stuart thats my question. Before the election you held out some hope that maybe president obama would see the tax cutting light. Have you abandoned that hope . Of course not, i never abandoned hope, i never, never, never, but he probably wont do it on personal income tax is what im hoping there can be accord and agreement a bipartisan solution to the Corporate Tax where we get rid of the tax and corporate profits which makes no sense. Why would you want to tax Successful Companies that bail out losers, that makes no sense and if we broadened the tax base, we can lower that rate dramatically and get a lot of new revenues and create more prosperity and thats where i think the democrats and republicans have a good area, where they might be able to compromise. Interesting. Art laffer, always good stuff. Thank you for joining us. My pleasure, stuart, thank you. Here is whats new at ten, you dont want to miss this. The american chief executive to refused to open up a tire factory in france because he says french workers are lazy and get paid too much. That man, international chief morrie taylor onset with us ten oclock eastern. Weve already got his take on the french. What does he think about American Workers . That will be top of the hour this morning. And the city of detroit flat broke. The governor of michigan is in the process of assigning detroit an emergency manager to figure out if theres any way to save the city. I want to bring in the lt. Governor of michigan, brian cowan. The way i see it, detroits got two options, basically they are, a state are federal bailout. Money coming in from the state or the feds or bankruptcy. Am i being too harsh . Well, what we really need is a permanent solution and that takes a couple of fundamental changes in the way that the city of detroit operates. Its performing to longterm liabilities and actions that really the local leadership should have been taking for the last couple of decades and failed to do and so now its time for us to get involved and make the changes. Stuart its a bankruptcy judge that can do that isnt it . When youre talking about longterm liability youre talking pensions and Health Benefits for retired city workers the only person who can stop that, stop the rot so to speak is a bankruptcy court, isnt it . In michigan we have an emergency manager statute that allows for the state to go through a process and then either enter into a consent agreement or appoint an emergency manager to carry out actions to improve the Financial Health of the city. Thats a process that were going through right now. The review team has made a recommendation that the financial emergency be declared. We have that recommendation in hand right now and over the course of the next few weeks well make a final determination on that and then decide how to proceed. Youve got to rein in the pensions and the Health Benefits for retired city workers, there really is again, am i being too harsh . Theres no choice, is there . When you look the at where the state of michigan itself was, just a few years ago, our longterm liabilities, including our pension cuts were mounting each year so we instituted a real reform over the last few years to reduce our debt. The state of michigans liabilities are over 20 billion dollars less than they were in 2011 when Governor Snyder and i took office. And that was those are hard decisions, but they have to be made so today we have our financial footing well underneath us and we are the comeback state. The example for the rest of the nation, but we need the same type of reform implemented in our cities as we also need in our federal government. Stuart all right. They would be draconian reforms for the city of detroit, i mean, no question, draconian . I think the most draconian thing you could do is leave the status quo because theyre not theyre losing the ability to offer even basic Public Health and safety functions, and so we have it stand up for the citizens of the city of detroit and really provide a frame work to help to solve this so that we can have Police Services and safe communities and streets and so forth. So, this is, this is a very serious situation. Deficits since 2004, and no real plan of action yet to fix it. This report is very serious and well make a determination shortly on it. Stuart yes, sir, come back and tell us how exactly youre going to do this. Were all interested. Lt. Governor of michigan, thanks, sir. We always want to hear from you and thats very true today. A lot of stuff on the show today and some big time guests. So, email it in please, varney foxbusiness. Com. Wednesday morning, seven early movers, here we go. Tivo post add loss, however, more subscribers and that stock is up. Disappointing results from the vitamin shop, the name of the company, the stock. Vitamin shop. It has the stock down 18 yesterday. Minor leagues bounced back today up just a buck on that. First solar posted a profit, but gave a weak guidance for the future and that means some bad news for the stock, its down 14 . Big five Sporting Goods gave upbeat Earnings Guidance for the future, raised the Quarterly Dividend and the market like that is up. Disappointing profits at papa johns and the Company Restated Financial Results for the past few years, its down. Fitch ratings downgraded its credit, rating that is, on avon products, the market doesnt like that, its not a big deal. Down 5 cents. Better than expected at priceline, thats t21 bucks as f right now. To the big board as we said a nat opening this wednesday morning, basically going nowhere. Were up just three points. Now, the price of oil, we were down in the 92 range yesterday and were still there, 92. 48. There was drama on capitol hill when senator Elizabeth Warren started asking ben bernanke about too big to fail. The senator was tough and the chairman did not back down. Our own judge reacts to thfrjis. So far it looks like theyre getting 83 billion dollars for staying big. Thats one study, senator you dont know whether thats an accurate number. announcer at scottrade, our clients trade and inve exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everim with scottrade. Me. announcer scottrade. Awarded fivestars from smartmoney magazine. Announcer you never know when, but thieves can steal your identity and turn your life upside down. Hi. Hi. You know, i can save you 15 today if you open up a charge card account with us. You just read my mind. 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Apparent apparently buying things for less and more for gas. Look at the stock up 010 . Two other items in what were cover calling a walmart economy. Moodys sees weakness in the clothing retailer, and that kind after walmart economy story and one big bank has downgraded fedex. Thats another one. Dollar tree up 10 more on that from charles later on. Fed chairman ben bernanke testifies in front of a house panel, and yesterday the highlight was between ben bernanke and Elizabeth Warren. Ms. Warren does not like the banks and asked the chairman if the big banks were still too big to fail of the here is some of the exchange. The benefits of being large are going to be small are going to decline over time and some banks are going to voluntarily begin to reduce their size because theyre not getting the benefits they used to get. I read you on this, i read your predictions on this in your earlier testimony. So far it looks like 83 billion dollars for staying big. Thats one study, senator, you dont know whether thats an accurate number. Well, okay, well go back and look at it again. If you think theres a problem with it, but does it worry you . Of course, i think this is very important. And i think we need to were putting a lot of effort into this. Stuart guess who is here to talk about the big banks . Judge andrew napolitano. Elizabeth warren says theyre still too big, too big to fail. I say, we should have broken them up, it would have been much easier than trying to regulate with dodd frank . Too big to fail is governance speak for too big for us to allow them to fail. Nothing is too big to fail and that the government will borrow money, or take tax dollars to shore those banks up. So we start at that as a baseline. This is a great question because theres a division in the free market camp, and the division is break them up. Because they got that big on the backs of the taxpayers and we should not be exposed to the risks that they have bourne, nor should we shore them up. Right. The other side of the argument is, let the free market take care of this, just get rid of the Federal Reserve and its involvement with them. But the government has no more right to say to jamie dimon, you have to split it to five banks than it could say to Stuart Varney you have to sell off your real estate assets because we think you own too much. Theres that split in the free market camp. One thing that free market people, you and i are in the same camp and im more libertarian than you are, the belief that taxpayers should not be at risk. So something needs to be done. Is it done by the force of government, one camp or is it done by removing the Federal Reserve from the equation, the forces the free market. The other camp. But i thought she asked a great question. Ive not been a fan about her and used negative comments when she was running for office she holds shes an intelligent woman and asked Great Questions and he didnt want to answer the questions, gave her a rude and snarky answers, how do you know about the 83 billion. The 83 is well established and probably on the low end of it. Stuart strangely enough im in senator warrens camp on the issue of too big to fail. Would you use the power of the government to break the banks laughin legislation or rule, requiring five different banks i would go that way you say the alternative to get rid of the Federal Reserve or at least get it out of the equation, stop shoring up these banks. Stuart thats not likely to happen. Correct. Stuart its highly unlikely. I go the other way, saying break them up. Take the taxpayer off the hook for mistakes which these Smaller Banks will make. We are travelling down the same path, but at different speeds. [laughter] we are. Unlike warren and bernanke travelling down the same path and not always going into the same direction. Stuart no, i think that senator warren is probably more aligned with you and i. And yes, yes, interestingly shes more aligned with you and me and he runs the fed and needs to be sensitive to that. She should be a champion of the fed, but shes a critic. Stuart the bottom line, this argument is going nowhere, absolutely nowhere. We have chosen the route of dodd frank to regulate the banks, let them get big and keep the taxpayer on the hook. The majority of the house and Many Republicans are wed todded it. I dont think any of us will see relief as long as barack obama is in the white house. Stuart i think weve come full circle. What the heck else can we agree on . Its raining out. [laughter] judge, thank you very much. A pleasure, stuart. Stuart the gold report, 9 49 eastern, 1603, down 12, but weve captured 1600 bucks an ounce. Its a theme we hit frequently on Varney Company. The entitled youth. However, wait for it. After the break, a story that shows there is still hope, a 18yearold walking ten miles in the snow to interview for minimum wage job and his hard work and determination paid off. What a guy. s with us after this. Down the highway in the night youre going to like this. Hes 18 years old out of work b and embarks on a ten mile trek to an interview. He asks for direction, the man an owner of a restaurant youll never get there in the snow take the bus. Teen keeps walking because he cant afford the bus. And the driver down the road sees him walking not only did the owner give him a job, but doubled his pay. And the man walking through the snow is with us. Good morning, young man. Good morning. Stuart what motivated you so much to walk in the snow for a minimum wage job . Go. Perservance. Im just, i was just determined. If i say im going to be somewhere im going to be there, you know, i needed it that bad. Stuart what do you think of other youngsters of your generation who we think on this program, we think they have a sense of entitlement that theyre entitled to a good job and this, that and the other. What do you think of them . You know, i dont think anybodys entitled to anything, really, now, its hard hard you work and you know, how you know, determined you are to get where you want to be. And how many others of your age think like you do, do you think . A lot, actually. Most of the classmates i used to go to school with, they all had jobs and you know, theyre working and i mean, theres a lot, theres a lot of teens out there thats working. Stuart look, we dont have much time, but we want to thank you for being on the show. We think what you did is terrific and were very glad that you got a job, doubled your pay and perservance and motivation, youre a great kid. Thank you last word, go. You said they doubled my pay, they didnt, its 8. 50 an hour, but it is more than what the other job was going to pay me. Stuart you did take it, right. Of course, yes. Good man. And thank you very much, yes, you are, and thank you for being with us, great stuff. Appreciate it. All right, thank you. Next the american ceo who blasted french workers, and called them lazy and entitled and not backing down. No, morrie taylor from Titan International is sitting next to me. What does he think about the American Worker . Here is a rare ceo who is not afraid to speak his mind. Plus, to california, major problems with green he energy could cause blackouts in the gulf states and carry down to cape cod, why would that be. Well tell you. Have given way to sleeping. Tossing and turning where sleepless nights yield to restful sleep. And lunesta® eszopiclone can help you get there. Like it has for so many people before. When taking lunesta, dont drive or operate machinery until you feel fully awake. Walking, eating, driving, or engaging in other activities while asleep, without remembering it the next day, have been reported. Lunesta should not be taken together with alcohol. Abnormal behaviors may include aggressiveness, agitation, hallucinations, or confusion. In depressed patients, worsening of depression, including risk of suicide, may occur. Alcohol may increase these risks. Allergic reactions such as tongue or throat swelling occur rarely and may be fatal. Side effects may include unpleasant taste, headache, dizziness, and morning drowsiness. Asyour doctor if lunesta is right for you. Then find out how to get lunesta for as low as fifteen dollars at lunesta. Com. Theres a land of restful sleep. We can help you go there on the wings of lunesta. Stuart wind and solar power in the news on two fronts. In massachusetts, wind power has not worked. Wind turbines are noisy and they are making nearby residents sick by unanimous vote the town Council Votes for their removal. It cost 10 million to put them up. About the same to take them down. In california, wind and solar bring a different problem. The power they create is intermittent, unreliable, but backup conventional power plants are going out of service. California faces rolling blackouts and outages. The president is sticking with his energy policy. Tax big oil. Delay fracking and subsidize those wind turbines, even if you have to take them down later. Stuart fear tactics from president obama. The white house is threatening economic armageddon if the spending cuts go into effect in 72 hours. Some of those threats, thousands, tens of thousands of middle class jobs lost. Flight cancellations and delays because of layoffs of the faa. And significant threats to our national security. Border security. Severe weather forecasting. The list goes on and on. The president says across the board cuts are wrong, not smart. And they are not fair. But according to the lead editorial in the wall street journal today, if the president thinks that the cuts are wrong, he has the power to divert the pain. He has the legal power to avoid spending cut damage. The president can pick what he wants to cut and how much he wants to cut it and spread it over a longer period of time. Vital services dont have to take a hit. The choice is his. Heres the company that will talk about all this and a whole lot more this hour elizabeth macdonald. Look at this, tom sullivan, i believe hes from california. Nicole petallides joins us from the floor of the new york stock exchange. Right off the bat, tom and liz, your reaction to the wall street journal statement, lead editorial which says the president has the power to spread the pain if he wants to, and hes not going down that road. Tom . Tom he wont do it because they are making the mistake. I mean it is an interesting article. But they are making the mistake that this is some sort of economic story, when its really a political story. The president is trying to drive a wedge. He knows that according to the latest polls, that the people are worried and are buying his story. More people support him, blame the republicans, so he thinks he has the upper hand. And hes going to go out there and hes going to try to play this to drive a wedge into the Republican Party because hes got them on the floor and i think hes trying to do that. Stuart in your judgment, will that work . Liz no, this has been attempted since the 80s. The president does have the power under the law to basically appropriate and say which programs are going to get cut. He has the power to do that, and what were talking about is a ratcheting up of the rhetoric now threatening hurricanes and droughts and possibly plagues. But, you know, i will tell you something now, fitch is out with another warning saying if you dont get your act under control, your fiscal budget problems under control, the Credit Rating will be under pressure for the United States. Its already losing the confidence and credibility, governments around the world. Stuart i want to bring in someone else, Titan International chief is here. Were talking about the french unions in just a moment. I have to get your comments on the president threatening armageddon when we dont have to have armageddon. Your comment . Well, number one number two, it is the same thing that the post office, if you look at the mailmen and women, what do you cut first . You never touch the ivory tower with all the management. And thats where they got to cut. Start at the top. Stuart just stay right there. Later this hour, by the way, senator tom coburn joins us to discuss spending cuts and why the president insists on inflicting maximum pain where there are obvious areas to cut elsewhere. There are even federal job openings like for a driver at the state department, why not cut that. Senator coburn has that point of view. 10 45 this morning. To the big board with 34 points higher on the dow, 13,935. Two stocks that tell the economic story today, first its priceline. Nicole the stock is a winner but because everyone who is booking trips is from outside the United States, not within america. Right . Nicole thats right. It is more of an International Story at this point for priceline. They compete directly with expedia. Though priceline is the bigger of the two and working on europe, working on emerging markets. You can see the stock is up 3. P 1 3. 1 right now, pushing that 700 mark. Earnings beat the street. Revenue outlook is better than expected. And as i noted, its all about the international travel. Europe, asia, thats where they are seeing a resurgence. Stuart i have another indicator, economic indicator, thats dollar tree, the stock is way up because it sees strong sales later in the year. Why is that . Is that because you have less in your paycheck so you go to places which sell stuff cheap . Nicole cheap is always better it seems at least these days when the payroll tax has increased and affected most americans at this point. So priceline is number three best performer in the s p. Dollar tree is the number one best performer in the s p. Up 9 . As you noted, their outlook is good. Even for the current quarter, they are seeing more customers and the customers are spending more per trip. So more customers, more spending, on the shopping that they are doing there. Thats good. Of course they have worked hard to control costs. A real winner. Stuart interesting economic indicators. You can probably read them either way actually. Nicole, thanks a lot. The dow is up 35. Do you remember this from last week . An american chief executive criticizing the french, maury taylor from Titan International. Heres the letter he wrote to the french government after refusing to renovate or open a heres the direct quote the french workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch. Talk for three and work for three. Stuart look at this, maury taylor is here with us. Sir . Thats what they said to me. Stuart that was the french. What do you think of american unions . Well, i think the ive got a Union Workforce in our plant, and you know, you have to manage. You have to manage it, have your work rules right. The american working men and women are great. Stuart you implied i mean you basically said the french workers are lazy. You wouldnt extend that to america, would you . No, i wouldnt extend to all the frenchmen. We have a factory in france. 15 years. They do a great job. What you have there is people have to understand its been over four years, goodyear has been trying to shut down part and save 500 jobs. This minister, he did not go to goodyear and then try to work the deal out for goodyear because we dont own the factory, but we were over there. We had agreed, but it was up to goodyear and the union. And they dont care. Those are 500 of the highest paid jobs in france. So whats with this politician . Why wasnt he talking with them . He chose to hound us. I mean we got a lot of emails. He wrote me a letter. I was in australia. I answered him back and just told him the facts. Stuart somebody published it. He did. He put it out. Well, he slipped it to the i think he was looking to rally, you know, hey, im these politicians are not for the working men and women. Stuart you see a strong future for manufacturing in the United States, with or without unions, right to work states or not. Do you have a strong future here as opposed to china or someplace else . Well, you have the Chinese Government thats supporting all their manufacturing. You didnt start losing manufacturing until a democrat, president clinton, and then you had companies that rushed for the cheap. Stuart but you dont want to have the American Government support american manufacturers to keep jobs here, or do you . I do. Trade policies, fair trade, i cant ship tires to china without paying a duty. I cant ship them to brazil. You cant ship. It is the same all over. If you are going to charge me you want fair trade . If they charge duty, we charge a duty. Otherwise you put with American Workers. Stuart the chinese tires come to america duty free . They were. And we sued. I have to go to washington. You have to hire the lawyers. Pay 7 million. And then we have a trial. We prove it. So they slapped the duties on. Stuart what do you make of the state of americas economy . We have been talking this morning that it is the walmart economy, slow growth, high tax, big debt, slow growth. We keep hearing that. What do you make of it . Well, whenever you have whether you look at most of the states, they are in trouble. Our president is from chicago. The whole state of illinois is screwed up. You have to have some people that understand you have got to shrink government so that you can have the private industry create the jobs and the wealth for you. Stuart we havent got that. We wont have it for another four years at least. You have to remember too. I have a little more optimism in American Workers, you know, that eventually they will straighten it out. It was bad back in the 20s and the 30s. We have had crazy politicians for a long time. Its nothing new. But you have to look at apple did pretty good. Stuart im laughing because you said crazy politicians, you just say that. Crazy politicians, do you realize the impact of that . Do you care . Theyre actors. They will tell you what you want to hear, 180 degrees to another. It is all about them. Okay . Stuart you are a breath of fresh air, you really are. Will you come back and see us again . Always. Stuart really . Im in new york all the time. Stuart case closed. You are on the set. Thank you very much for joining us. Thank you. Stuart to our other new at 10 00 story, on green energy, problems with green energy from cape cod. Too noisy, makes residents sick. They are paying money to get rid of wind turbine. In california they are having blackouts, because it is unreliable. All right, tom, you are a californian. Let tees not forget. Lets not forget. Tom they have gotten themselves in a pickle. They say we need more alternative energy. The problem is alternative energy isnt stable. When the wind blows, great youve got some. The sunshine, what happens at night and a cloudy day . You have unstable larger portion of electricity. Stuart you have to have a back up power plant using coal, oil, nuclear gas. Yes, but the problem is theyve oversupplied now on a sunny windy day, they have got an oversupply, which means that all the companies that sell electricity have to charge a cheaper price because theres an abundance of supply. So then they go were going to shut down these plants because were not able to get the money for it to be able to run some of these plants, which mostly natural gas. Liz california has been an oil state since 1865 or there abouts. Has great natural gas reserves. Carbon emissions are 13 below 05 levels helped along by nat gas. But the issue is that you and me and the viewers and the taxpayers are subsidizing wind power and other alternative energies. Basically our bills are 20 higher in states like california and michigan because of that. Stuart all right, everybody. I think weve got that one nailed down. By the way, the dow is now up 50 points. That was a very good report, strong report on pending home sales. Maybe that moved the market a few points. Up 9 1 2 . Solid performance again within the housing industry. Up 50 at 13,950. Next case, marijuana, decriminalized in Washington State and colorado. Even if you dont smoke weed, there could be money to made. Dare i say that . After the break, a businessman who will help you invest in legal weed. But first, heres what you missed if you didnt start out the morning with Varney Company. Why would you want to tax Successful Companies and bail out losers . That makes no sense. Stuart priceline reporting some serious big numbers. In the last 13 weeks it booked 6 1 2 billion dollars worth of travel on its website. However, thats mostly from international bookings. Within america, a lot of trips, yes, but but not much profit margin. The stock nicely higher, 20 on the upside. The upside. There was a she keeps you guessing. Its part of what you love about her. 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Zynga is up 4 . It is up over 27 this month alone. So the fact that we have Online Gambling legalized in nevada, in new jersey and its really online poker predominantly, obviously bodes well for future revenue. Stuart take a look at another couple gambling companies, Bigger Companies i think they are planning maybe to get into Online Gambling later. What do we have . Mgm . Nicole caesars, mgm, las vegas sands, and you can see all up arrows across the board. And the dow is picking up some momentum, up 45 points, but yes, this particular group is doing so well on the heels of this Online Gambling story. Stuart all right nicole. Now marijuana is now legal in washington and colorado. That means a lot of people are looking for ways to make some money in it, invest in the pot business. Ive got a guest with me today who is going to tell us how you do that. How do you invest in legal pot . His name is troy dayton, the ceo of arch view group. Welcome to the program. I want to run through this because lets nail this down. Can you invest in the paraphernalia which pot smokers use . Can you invest in the growing equipment that pot people use . Can you . Absolutely. Mark twain had a great quote. He said when theres a gold rush on, its a good time to be in the pick and shovel business. Thats exactly whats happening right now with the cannabis industry, particularly given that cannabis is still federally illegal. Stuart hold on a second, troy. When were talking about paraphernalia and the growing equipment for hydroponics, are there companies, publicly traded companies that i can put money directly into . Are there . Sort of. I mean the Public Companies in this space are Pink Sheet Companies that are largely, you know, nonreporting companies. So its kind of a dicey proposition there. But yeah, there are some plays that people are making in that space. But i think that the real action, as is often the case in new industries is in private companies. You know, accredited investors investing doing angel investing. Thats why we have an Angel Investor network. People are looking to put 25,000 to a Million Dollars into an Early Stage Company is really where i think the best opportunities are in this space. Stuart thats what you do. You accumulate money. You know the industry. You allocate that money into areas which you think will grow with the cannabis market. Thats essentially what troy dayton does; correct . Sort of. I run an Angel Investor network which means i bring together High Net Worth individuals, people that represent Venture Capital funds, and people and Industry Leaders in this space who are looking to invest money and then we bring companies to come and pitch them. A whole range there. Stuart i have heard some Horror Stories about people going to colorado. They know it is legal. So they figure they will open a pot shop. They havent a clue what they are doing. They have no business sense whatsoever. Most of them are pot heads. They are stoned all the time. They have not a clue about profit and loss. Is that what you are finding . This industry is very fragmented. Theres a lot of opportunity here. The marketing branding bar is pretty low. It is a really huge opportunity. You are absolutely right. People are getting excited about the hype and they are jumping in to things without necessarily looking at all of the risks. Theres a real good reason. I mean, this is definitely going to be the next Great American industry. Theres no doubt about that. Stuart thats interesting. The next Great American industry. Yes. Stuart okay, all right, we will leave it at that. Troy dayton, nice idea, we will see you later. Thank you very much. Tom i dont think this is the next general motors. I just dont think so. Liz or the gold rush. Stuart you do hear forecasts look if it is fully legal all over the place, the feds legalize it all 50 states buy what you want, smoke it where you please, if you do that, you have 20 billion dollars a year industry . Liz at a time when some of the cities are seeing High School Dropout rates at 50 or higher. I think it is problematic. Tom are there warehouses they have to lease in order to do the hydroponic or can they put it out in the farm and you invest in john deere because they will be growing another crop . Stuart dont use the name john deere. Troy dayton is the man you need to see, tom. He will fill you in on this one. Stuart the Economist Says money is being hidden offshore by u. S. Companies, individuals actually it is more individuals. Should we go after that money . Even if its being hidden legally . Should we . Thats next. [ engine revving ] [ male announcer ] every car we build must make adrenaline pump and pulses quicken. To help you not just to stay alive. 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Com to try lifelock protection risk free for a full 60 days. Use promo code gethelp. Plus get this document shredder free but only if you act right now. Call the number on your screen now stuart heres a question for you, would you go on a ship thats the exact replica of the one that sank . Titanic 2 is set to sail across the atlantic in 2016. Get this, 40,000 people have already submitted applications to be on that maiden voyage. President obama threatens financial armageddon if fridays spending cuts go into effect. According to senator tom coburn, the president has the power to act on spending cuts right now. He doesnt have to enforce the pain. The senator joins us at 10 45 this morning. Hes got a whole list of cuts that he would prefer. Joining us in just a few minutes. A special report in the economist magazine, newspaper, it says theres more than 20 trillion dollars sitting in offshore tax havens. The economist wants to reform tax laws so it can bring some of that money back home. Heres what our own judge napolitano had to say about that once you have paid taxes on your money, it is yours to send it where you want. If it is outside the u. S. , the United States government has no claim to the interest that it earns. Not only i stuart he almost finished. Joining the company now is someone who is against tax havens, his name is james henry. He is the author of a book. Welcome to the program. Good morning. Stuart whats wrong with me earning income in the United States, paying tax on that income, accumulating it, saving it, and then if i wish, putting it into a Cayman Islands bank account and declaring to the irs ive got money in the Cayman Islands and if i earn income on it, i declare it to the irs. Whats wrong with that thats not the case with most of this money that we have identified in the Tax Justice Network report. Stuart but it would be the case with me. It would be the case with you. If you did all that, thattwould be fine. No problem with that. Stuart who are you to stop me . Most of the 20 trillion is illegal and it is not paying interest, not paying taxes. Stuart who are you to stop me doing something which is perfectly legal and ethical . Well, me individually, nobody, but the governments of this world are now struggling with budget deficits. They are struggling for were transferring all of the tax burden to the middle class and the poor is not the solution. Defending really the rule of law here. Does the law apply equally to everyone or does it apply can rich people play games . And thats what most of this is about. Most of this money is not declared. Most of this money is not paying any taxes. Its hidden wealth thats not been counted in theenational accounts. Stuart youd abolish them all. Theres no such thing as banking secrecy overseas. You cant have it. You are going to shut them down and you are going to force that money to be repatriated. No, we would like to have more information reporting on what the actual amounts are. Stuart then you have to force the caymans and the swiss and the others to say hey, this guy has got this money. If you havent noticed, stuart, theres a massive Tax Justice Movement thats grown up in the last five years. Thats what we are about now. Stuart you are saying im not allowed to hold my assets secretly any place abroad, thats what you are saying. You are. You can do that as long as you declare the income. Americans have america has a worldwide income tax. Stuart thats what i do now. If you do that, thats fine. Stuart right, but you would shut me down. Most of the people im talking about are not going to be able to do that. Because these secrecy jurisdictions are not living off legal behavior. They are living off people who are avoiding the law and shifting the burden. Stuart you would shut me down. Switzerland could continue to offer accounts to americans as long as the interest is declared to the irs. If you are willing to pay taxes on your swiss bank accounts, i dont know why you would bother to do that, but, you know, you are welcome to do. Stuart but you would i would end the secrecy jurisdiction. This is about the rule of law, its not about tax rates. It is strictly about the fact that do we have a rule of law that applies equally to everybody, or do the rich get to play games . Stuart i think you are coming from the hard left, arent you, james . No, im a pragmatic conservative. The rule of law is actually a very conservative principle. If we simply enforce the tax laws we have now, we would raise enough money to balance the budget, pay the sequestration problem, all of that. Its not being discussed in washington because nobody really wants to tackle this very influential industry. Stuart all right, james. Tax enforcement is what im talking about. Stuart we hear you. It is a very interesting discussion. The blood bankers, interesting title, im out of time, but come and see us again. Thank you. I like your position on banks. Stuart you do . Very much so. Stuart we have some agreement here. Thank you, james. Joining the company from chicago, lets bring in Scott Shellady because were waiting for the q a session in the house between ben bernanke and house members. Scott, you follow this very very closely. I have to say that theres no way on earth that ben bernanke is going to turn around and say im not going to print any more money. No way, is there . No, absolutely not because were in a fix where we cant get out of. Hes going to print in the hopes quote unquote that we find some growth somewhere down the line. Lets not forget its all about growth. He prints until we find growth and thats it. Stuart increasingly what im hearing is were going to have a huge problem when he says he may stop printing. Thats when the crunch comes, isnt it . Well, there could be a crunch, but why would he stop printing . That means we found some growth or something the economy has gotten better. I mean hes not going to pull the rug out underneath from anybody while things are poor or getting worse. I think thats where we ere at right now. We are at right now. If we see some growth and the economy starts to get better, he will start scaling back things and the economy can take it. As of right now, this economy and our gdp we cant take it. Stuart hold on a second scott. Scott shellady there he says this economy, our situation we cant take it. Am i right, scott . Youre saying hes got to keep printing, right, thats what youre saying . Hes painted himself in a corner he has to keep printing. Tom but the markets and everybody else are bigger than bernanke. They will decide. I think were heading for that inflation will come but the economy wont grow. The reason inflation hasnt come is because the economy is in the doldrums. Wait until the marketplace says we want more return and inflation will start to go up and there will be no growth in the economy. Stuart do you agree with the basic premise, theres no way that ben is going to stop printing any time soon . No, hes not going to budge. Stuart scott, im sorry, im out of time. We got your message. We hear you. Thank you very much indeed. They are going to the q a session now in the house. Were going to join it in progress. Lets go. The extraordinary has become ordinary and indeed we need to examine these policies, which you put in a cost benefit framework. Briefly i want to inquire about the risk, the benefits and the cost. In your testimony, you said, quote, the committee remains confident that it has the tools necessary to tighten Monetary Policy when the time comes to do so. But chairman, i think you know that other predictions have not proven valid. In may of 06, you seemed to be confident that we were witnessing, quote, an orderly decline in the Housing Market. And in 07, you predicted, quote, a soft landing for the economy, neither of which happened. The fed has been fairly off on its gdp projections, which two months ago you stated, quote, well i think its fair to say that we have overestimated the pace of growth. So chairman bernanke, i guess i recall a quote, never make predictions, especially about the future. I assume you will admit to being human and being fallible . That causes us some of us to question how much confidence we should have. Its not as the gentleman from california mr. Campbell pointed out, it is not just members of this committee, but apparently the voices of doubt and dissent within the fed are growing more vocal. Jeffrey lacquer, president of the richmond fed quote i think further monetary stimulus is unlikely to increase the pace of economic expansion and these actions will test the limits of our credibility. Bloomberg has reported that Charles Plosser Philadelphia Fed president , plosser said he favored halting additional bond purchases because their benefits are pretty meager and there are lots of risk. Closer to home, richard fisher, president of the dallas fed, quote, i will be asking myself what good would it do to buy more mortgagebacked securities or more treasuries when we have so much money sitting on the side lines, and yet have no sense of direction for the future of the federal governments tax and spending policy. How could additional Monetary Policy be stimulative, unquote. I clearly believe you disagree with these fed president s. Is that correct . Yes, sir. Lets examine the benefits of your current policy. Again, we know we are in a slow and weak recovery. Heres the question i have, mr. Chairman, according to fed data, banks are sitting on 1. 6 trillion in excess reseeves. And in the latest quarter, that i have data, Third Quarter of 2012, nonfinancial corporations are sitting on 1. 7 billion in liquid assets. So arguably thats over 3 trillion dollars of capital sitting on the side lines. I believe i have this right, at least for the last data i have on i believe qe 2, 80 of that qe ended up as excess reserve. So given as much capital as sitting on the side lines and since we are essentially in a zero to negative real Interest Rate environment, why do you believe that further quantitative easing is somehow going to cause entrepreneurs and job creators to put all this capital to work . Thank you, mr. Chairman. First on the disagreements on the committee, we have our debates more or less in public, as you know. And i hope you would take some comfort from the fact that a wide range of views and points of view is represented on the committee. I do take solace and i hope you listen to them carefully. We do discuss all these issues. Of course the significant majority of the committee is supportive of the policies that we are taking. You are absolutely also right that predicting the future is always dangerous. But were not talking about here about a forecast of the future. What were talking about the tools that we have to unwind the balance sheet. And we have a variety of different tools, including not just selling assets, but other tools such as raising the Interest Rate on we pay in excess reserves and the use of other draining tools, which based on the experience of other central banks, would be effective in allowing us to unwind that policy. Of course, doing it at the exact right moment is always difficult. Chairman, im about out of time and going to attempt to set a good example here. I want to ask one last question which you can submit the answer in writing. You mentioned earlier that i believe as i understand it, data or reports from the fed is that you will cease remitting profits to the u. S. Treasury in that under your own analysis, the size of deferred assets im always curious how a loss is a deferred asset could peak at 120 billion dollars, but other economists say its closer to 372 billion of taxpayer money that could exacerbate the debt. So in writing, i would like for you to respond whether or not indeed the debt could be exacerbated by 372 billion under a worse case scenario. At this time, i will recognize the Ranking Member for five minutes. Thank you very much, mr. Chairman. Again, mr. Bernanke, i would like to thank you for further explaining and educating this committee on quantitative easing, the policy that you have provided leadership on, and id like to make sure that the members of this committee understand that this discussion about all of this dissent is overblown. As i look at the voting on this action, it appears that you, mr. Bernanke, mr. William c. Dudley, mr. James bolert, elizabeth due, charles l. Evans, jerome powell, sarah raskin, Eric Rosengreen and janet yellin all voted to support you and the policies. There was only one person dissenting and that was esther george. It seems to me you have strong support for the actions you are taking and the leadership that you are giving. Im very appreciative for that. You know, i am surprised at myself for, you know, the confidence and support that im showing because you know ive disagreed with you in the past on a number of things. But i also find myself a little bit surprised that i am focused a lot on what happened with a recent Research Note that was released last friday, by the bank of americas chief economist, ethan harris, where he warned that harsh budget cuts due to start taking effect this week would hammer the economy, potentially dragging the country back down into a recession. Mr. Harris wrote that he expects this painful shot of austerity to slow gdp growth to just 1 in the second quarter, with job growth averaging less than 100,000 per month, for those three months. We also know that Many Republican and Democratic State governors are demanding immediate action to stop the automatic spending cuts, expressing concerns that sequestration would force their state economies back into a recession. So while you have explained to us Monetary Policy, that you are providing this leadership on, and while you have, you know, given us great information today, about what you feel would happen with this economy if we did not stimulate it somewhat in the way that you are doing, i want to ask you, can you offer any insight or more insight into what the potential impact would be to our economy recovery if sequester were to take place as scheduled on march 1, and can you elaborate on why you believe it is more important to focus as you have said today on deficit reduction over the longterm rather than blunt austerity measures in the shortterm . I would like to hear more about this. Yes, maam. I cited in my testimony just the numbers in the congressional budget office, which suggest that fiscal measures will reduce growth this career by 1. 5 percentage points, which is very significant. If you look at the path of the deficit projected by the cbo, you see that for the next few years, progress has been made, and the debt to gdp ratio in particular doesnt look like its going to be rising for the next few years. Where the problems arise, where the most serious are further out, when our aging society, rising healthcare costs and so on, together with other costs, begin to. So my suggestion for your consideration is to align the timing of your Fiscal Consolidation bet we are the problem better with the problem, that is to do somewhat less in the very near term when it will have the greatest impact on growth and jobs, and where the Federal Reserve doesnt have any scope to offset it. And instead to focus on the longer term where the real problems i think still remain. And so youre not against cuts, and youre not saying that we should not be involved in making cuts where we can make them, but what youre talking about is the level and the amount and the amount of the cuts that perhaps are being made that will slow down the growth in the economy, and you think that if we concentrate more on Job Development and stimulating the economy, that we should take a longterm approach to the cuts, is that basically what youre saying . I am very much in favor of getting our fiscal house in order. But i think its a longrun issue, and that i would be supportive of a less frontloaded set of measures. Well i think it is important to get that on the record because ive heard some discussion about your statement, even as it was made yesterday, and i think some people were confused and thought you were saying we shouldnt make any cuts, and i think you are very clear about what you are proposing, and i thank you very much. Thank you. The chair now recognizes the gentleman from california, mr. Campbell for five minutes. Thank you, mr. Chairman. And unlike the Ranking Member, ive generally agreed with what you have said in the past, but now we diverge diverge, funny how that happens. In the january 2013 fomc Meeting Minutes which were just released, it reads in part and i quote, a number of participants stated that an on going evaluation of the efficacy costs and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that is substantial improvement in the outlook for the labor market had occurred. If these voices are right and the unemployment does not drop significantly or below your target and inflation does not rise above your target, at what point do you decide to wind this down, call it quits, and try Something Else . As i said in my remarks, we have a cost benefit framework. Were going to be looking at both sides of that equation. Well be looking at benefits, trying to assess whether were getting traction, whether the economy is benefitting from these policy moves, whether were seeing a stronger economy particularly in the labor market. Stuart the dow has gone up because hes going to keep printing money but theres another big issue on the table today, and that is spending cuts. Senator tom coburn joins us now. Senator, the wall street journal says that the president already has the power to make these cuts less painful. He could do it if he wishes to make them less painful. But hes not doing it. Why does he insist on forcing pain down the american throat . Oh, you know, its all the politics of it, rather than the policy. And, you know, this is relatively speaking, this is a small amount of cuts that could easily be accomplished by giving him a little more flexibility, in addition to the flexibility he has now. You know, he has a decision to make. He can make these cuts very painful and use the policy benefit to blame that on the the political benefit to blame that on those of us who think the federal government ought to quit growing as fast as its growing or he could do it where he could make them as least painful as possible, and get a cooperative congress to give him even more flexibility. If we dont make these cuts, the pain thats going to come in the future is going to be far worse. And theres going to be much more severe cuts. So, you know, its all politics, stuart. It is not policy. And its the right thing for us to do. Its the second time we have cut spending since world war ii. And the last time was 1995. Stuart senator, you have got a list of cuts which could be made very easily and painlessly. Can you share just a couple of the items with us . Well, first of all, the gao has put out a report, theres 347 billion dollars in expenditures a year where we have multitudes of layers of programs that duplicate one another. So just by pulling back on some of those programs and enhancing the others, you could accomplish what the American People need. Example, 47 job training programs, all but three totally overlap one another. We spend almost 19 billion dollars a year on those. We have stem programs, 209 of them throughout the federal government, thats Science Technology engineering and math. We spend about 6 billion dollars a year on that. And we have 209 programs which means we have 209 sets of administrators. Federal housing programs, we have 3700 different Housing Agency directors in the country. In oklahoma, we have a Housing Agency that has no homes. But were still paying a director. I mean, there are all sorts of things. If we just manage what were doing better, we can save hundreds of billions of dollars a year. Stuart it looks to most of our viewers and myself and im sure to many people in congress, that we are indeed going to go and get these cuts on friday. Will you tell our viewers if planes are going to be delayed next week . Are children not going to be vaccinated next week . Is meat not going to be inspected next week . Is that going to happen . No. Stuart absolutely, flat out no . And if it happens, it is the ineptitude of the Administrative Branch because they want it to happen for a political purpose. Stuart do you think well ever really get a handle on our debt when we make such a fuss of cutting 2 of our total 3. 8 expenditure . Well, yes, were going to eventually get a handle on our debt, and the reason why we are is the arithmetic doesnt work and the rest of the world is going to quit loaning us money that we can afford to borrow. Were going to do it. That will be very very painful, stuart. If we do it this way and then reform do things like the Simpson Bowles commission said, if you are going to reform the taxes use it to lower the rates to ultimately increase the revenues of the federal government and to have actual really good plans at reforming medicare and reforming Social Security to save those programs, we can do that, and we will do it. But the timing is it just shows you the government is twice the size it was 11 years ago and it shows you that the career politicians pay more attention to parochial interests than they do the longterm best interest of the country. Stuart senator tom coburn, we always appreciate you being with us, sir. Thank you very much for taking time out of a big day. You bet. Stuart thank you senator. Before we go back to ben bernanke and his questioning by the house there, i want to repeat some of the numbers we used earlier. Tom, i want to bring you into this. Every day we add 3. 2 billion to our debt. Every hour, 136 million. Every second 37,000. This program is almost two hours long. We will have gone through 270 Million Dollars worth of extra debt by the time we go off the air. Quick comment before we go back to ben. Tom well, tom coburn is absolute lil right, but absolutely right, but hes right in the fact they wont do anything until theres a crisis. They wont do anything until theres a crisis. This is political. This isnt economic. The president thinks hes got the upper hand on the republicans. Hes going to make them look bad. Stuart the president has the power not to impose this pain. Thats whats coming out this morning. Liz correct, hes had that power from day one. What happens is you have bigger government, bigger government spending. You have to have higher taxes to pay for it or devalue the dollar. Thats the only way. Stuart all right. Ben bernanke still talking about printing some more money. It rolls on. The dow is up 68. Likes what hes got to say. Lets go back to the hearings. Put people to work in several ways. It will put construction workers back to work obviously and people who work in factories that build, you know, appliances or other things that are related to housing. But in addition, the increase in house prices and increase in general Economic Activity should benefit other sectors, other industries as well. Thank you for that response. In another area that seems to be ahead of pace of our economy is healthcare. And the spiralling cost of healthcare. Do you foresee prices stabilizing there, or will it just continue to spiral out of control . And hit consumers the hardest . This is a critically important issue because one of the main sources of our longterm budget problems is the fact that healthcare costs have gone up a lot faster than other costs over the last 40 years or so. Recently, the last four or five years, the healthcare costs have actually gone up somewhat more slowly. Part of that may be due to the recession and the fact that fewer people are able to afford or seek care. So i think it remains to be seen whether this relative decline in the pace of increase of healthcare costs is going to persist or not. If it does, it will be very good news. Not only for americans who are trying to afford healthcare, but also for the federal budget. But i think there remains a lot to be done in the healthcare area to improve incentives, to improve quality, and to improve access. And thank you for that response. Im sure we could take it an entire hearing on just the cost of healthcare. And longterm and shortterm goals for that area. Currently the Unemployment Rate according to the Labor Department is 7. 9 . What can the Federal Reserve and congress do to put americans back to work . And i heard you say in your testimony that we should continue investing in job training and retraining. Any other suggestions . Well, in the fiscal side, i mentioned first the notion of taking a longer run perspective on addressing our fiscal sustainability issues to avoid some of the adverse effects in the near term of very sharp cuts and job losses. And the second point is as you noted is that i think everyone would agree on both sides of the aisle that the money we do spend, the taxes we do collect should be done the best way possible, that we should be thinking about each program and is it achieving the objectives that we set for and is it creating a better trained workforce . Is it creating a more productive economy . Is it creating a more fair and equitable and efficient tax code . Those are the kinds of issues that need to be addressed as well as simply the total spending and revenue numbers. As you are aware the dodd frank, Consumer Protection act, required the [inaudible] be established within agencies regulating financial institution. What action has the Federal Reserve system taken to meet these requirements . We have followed everything required by the law. We have worked weve established an omwi in the fed and in each of the 12 Federal Reserve banks. And we are pursuing the supplier diversity and other requirements of the law and we are working collectively as we have been told to do with the other agencies to develop some criteria for assessment of diversity practices in regulated institutions. Thank you, mr. Chairman. The time of the gentleman has expired. The chair now recognizes the vice chairman of the committee, the gentleman from california, mr. Miller, for five minutes. Thank you, mr. Chairman. Good to have you here chairman bernanke. I know you care about unemployment inflation, you have expressed that in your statements over and over. I know you care about the economy. But im having some concerns with some of the regulations being proposed by the fed right now. You did state that the Housing Market is recovering and i agree with that but it is very fragile in my opinion. The new housing regulations are very concerning. It was meant to protect consumers. When its finalized, really presents credit worthy consumers from getting a mortgage in my opinion. A recent study says 40 of the mortgage originations would be eligible under qm but perhaps some of those shouldnt have been made but thats a scary number. Im concerned as defined by qualified mortgage, any loans does not meet this requirement basically will not be made in the marketplace. A recent study by core logics says thats a huge problem. On qrm its meant to make sure that lenders have skin in the game. But as drafted the field would be so small im not sure theres going to be a field by the time you get through with it. We sent a letter to you, i think its 208 members signed complaining about the 20 down. If qrm is too narrow, firsttime homebuyers i believe will be driven out of the marketplace which will cause another dip in the Housing Market. Congress intended for mortgage insurance to be a qualifying factor in qrm. Could you please speak to that . Certainly. As you know we couldnt finalize the qrm rules until the qm rules were completed because qrm can be no broader than qm. We have