quote, did you tell her you were interested in taking a short position in abacus? pelligrini, yes, that was the purpose of the meeting. the government does not mention this information in its complaint. sec spokesman john nest inner a statement said, quote, our case is built on a complete evidentiary record that includes testimony, documents, handwritten notes and e-mails to be presented in court at the appropriate time. it is possible the government has other evidence contradicting this testimony which aca claims did not know paulson's short position and pelligrini declined to comment. >> that's the key thing. if you have a piece of paper that says pelligrini told them, i told them we were going short but they still brought the case anyway maybe there's something else out there. >> right. we also know pelligrini told aca of its selection criteria that they were looking for low fica scores. what did you think they were doing? >> we could see during the entire structuring of this vehicle they would meet together. and they dicker over which assets could be in there. we want to take these out. put these back in. take these out. you got the idea they were on opposite sides of the table from the start. >> and pelligrini says in his testimony it was clear we're on opposite sides of the deal. >> how unusual is it not to have an equity trench in a cdo? >> this is a synthetic ceo and i just talked to an expert about this and he says in a synthetic cdo it is fairly normal. in a cash deal there must be. the idea that aca would not have known there is no equity stake is what the question is here. >> so this synthetic cdo was made up of what, credit default swaps? >> it was made up of yes essentially bets on the movements of residential mortgage backed securities. >> and whether they were going to go -- >> they were looking for geographic locations, a whole bunch of things. in other documents we've reviewed, among the deals that they are looking for are deals written by investment banks. goldman sachs, lehman brothers, and bear stearns. because those were poorly written as opposed to ones by commercial banks. that was one of the criteria of paulson was to look for deals written by the very -- guys that were going to be on the other side of the deal. >> shocking investment banks had lower underwriting standards. we welcome our guest who wrote "paulson confronts goldman fallout." good to see you. any thoughts on what steve had to say? tell us about the efforts paulson is making to restore or maintain his reputation. >> sure. it's already a challenging case for the authorities i would argue. you do have to remember, though, there is another investor involved, the big german bank akb. you have to even if one argues that aca should have known better and did know better the question is whether goldman misled the other investor in this case, in this deal. as for john paulson he is reaching out tuna vestors left and right and sort of calling people, having meetings, a conference call started earlier this morning. he is being pretty aggressive here, pretty confident, rather calm, reassuring his investors that there are no more wells notices likely to come and that he didn't do anything wrong and it's business as usual. >> has he lost any clients or are there clients that you think he has an indication he might lose as a result of this? >> there are a lot of people thinking about whether to take some money off the table. you have to remember they're huge, about $33 billion, so all things being equal people were maybe nervous anyway before all of this because historically big hedge funds haven't done especially well. so this could be one reason why people just say i'll take some money off the table. >> how often can you take money out of one of paulson's funds or the biggest of his funds and if i'm a share holder in one of those funds do i need to worry if there are redemptions that paulson is going to have forced liquidations of positions than that is going to hurt me if i stay in the fund? >> he has quarterly redemptions so they've got to let them know by this coming friday, the end of april. the question is, liquidity. they're pretty liquid positions generally big holders, things like citigroup, that are easy to get out of. so a lot of investors say i'm not as nervous as i could be with another hedge fund because the positions are so liquid are there investors in his fund though, greg, that have clauses that preclude them from investing with someone who perhaps is involved, implicated, whatever it is, in a story like this? we heard from money managers yesterday who sold goldman sachs stocks because it went against the parameters of the funds that they were managing. is there any kind -- >> sue, i think there's no allegations right now against paulson which is implicit in your question. i just wanted to add that specifically. >> right. >> i was going to make that point. obviously hasn't been fingered in doing anything, not charged, not accused of anything. there's a worry on the part of some investors that there might be some private lawsuits, maybe the european authorities, but generally speaking they're not too worried about that. yeah, obviously they'll revice that if there are any charges. >> could i ask you about this equity thing? how does the government allege that goldman tried to tell aca they were involved in equities stake when it is apparently obvious to everybody involved there is no equity stake in the deal. >> the question is when. maybe aca knew at some point there wasn't but earlier on when putting this together they thought there would be an equity stake. >> why were they meeting in a bar in jackson hole? >> it was apparently pelligrini was there on vacation. >> yes. >> and the other person was too? >> no. the other person was there for a conference. >> i see. okay. >> literally a case of he said/she said. >> we don't know. she never told me anything. >> if i could amend it, it may be. we don't know what she said. we don't know what the government has that would contradict this to where the government would end up saying here's what we know about what goldman represented to aca. >> there's a lot more that's going to come out so stay tuned. >> thanks. great job. >> thank you. >> let's get the market action. bob pisani is at the new york stock exchange. bob? >> hello, dennis. continuing to get good news in the stock market and on earnings. demand is improving just about across the board. the problem is much of this has been anticipated by the stock markets, getting a little tougher to move stocks forward. one area though? financials. we got a number of companies reporting positive earnings. now, that was a surprise. comerica for example, now in the black. that happened a little bit earlier than a lot of people anticipated. we got new highs. some of these nice moves up here, clearly a little short covering here as a lot of these banks here had a small but significant short base. let's move on, talk about other things going on. goldman sachs, well, you know, even goldman sachs which has struggled obviously, that's gone positive here today. that's another positive trend. though the volume and the volatility isn't nearly what it was even just a few days ago. we got several companies with new earnings out. dow, new highs here. for example boeing, united technologies, and mcdonald's. finally, goldman created a lot of volatility but it's now moving back down here. there is the vix, volatility index, spiked up last week, now to the down side. trader talk.cnbc.com. bertha, how we looking at the nasdaq. >> apple is the stock of the day. interesting, apple blowout quarter, $3 billion in profits without a new product. so what can we expect for this quarter with the i-pad? meantime, the stock has sort of stalled out at $260 though the price targets are now well above $300, $350 from deutsche bank and whisper number.com says if you look at apple usually sells a little bit off on the day after earnings, down a little bit five days after, and up 7% 30 days after in the last days it's been up 16%. huntington bank shares, manhattan associates, gen zim all better than expected. genzyme really a win given all of its problems. in the earnings disappointment that's weighing down the nasdaq today, yahoo, a lot of folks disappointed about the revenues apparently and the guidance there. and gilead which is cutting its 2010 outlook on those rebates due to the government on drugs because of health reform. back to you, sue. >> thank you very much, bertha. a little pressure in some of the major indices. a little down side bias in the dow jones industrial average, the nasdaq and the s&p. that's despite today's positive earnings results from a number of companies. let's talk about it more with our power lunch market insiders. we have the vice president of wells trust, arizona and the fixed income analyst with global. you say basically you need to see a little bit more from earnings. you want to see real expansion rather than the cost cutting and the inventory building that we've been seeing. >> well, for prolonged performance in the equities markets i think we need to see that. i think that the cash for clunkers we had in q3 and the inventory rebuilds we had in q4 were very good for the market. i think that as we start seeing more positive earnings come out it starts to give us some more stability to be able to perform positively going forward and i think with our impending interest rate and inflation environment we're going to be entering in the next nine to 12 months it's very important to keep an eye on that. >> aren't we seeing the beginnings of better revenues and that this suggests really organic growth here? the ones i've been looking at revenues are pretty good. >> i agree and i think there is some substantiation with the performance in the market. i wouldn't have been able to say that about six months ago. so i think it's given us a better idea and it's also given us a lot more confidence in being proactive in how we position these assets going forward. and also with some of the rush to safety that we had in 2008 and then some of the inflows of money into the bond funds we have i think it was record year last year. we're starting to see that trickle in especially on the retail side with some of the equity investors. >> i'm getting e-mails from folks who tell me the weakness today has a lot to do with greece again. should we believe that or i thought we were shaking that off or is that situation in europe suddenly going to become another issue for us? >> i think greece's problem is pretty much everybody's problem. the fact of the matter is if there is a default in greece it really is the reality that you can have a sovereign default in a western country. i think that definitely just escalates greater fears of other sovereign defaults. there are a lot of broad, macro headwinds in the economy right now. i think there are still concerns about employment. and also we've had a lot of pent up demand that's pushed up, enhanced retail performance but what happens when transfer payments start falling and the pent up demand starts to wane? will the consumer demand still be there? i think that's a question. >> come on, guys. let's be happy. apple is out. products you don't need at all and they just had game busters almost double earnings. the consumer is back. all you wall street experts just don't quite get it yet. heath, second my motion! >> well, i think that there is still some caution that needs to be maid. >> oh, you frayidy cat. >> we're pretty neutral on the equities markets. it's enkournld kournlgd us to take a more heavy position outside the united states. >> all right. >> that's something we need to be aware what's happening in europe but the pacific areas are still very attractive. >> thank you both for that cautious outlook. we really appreciate it. tyler? >> all right. those are amazing numbers on market cap. >> they are. >> number three. >> yes. >> and huge increase on huge results already from a year ago. >> let's talk about boeing, mcdonald's, united techs and big guns weighing in with earnings today. we are going to as the saying goes drill down on the numbers in earnings central. plus -- >> the faces behind facebook. julia boorstin logged into the facebook developer conference with zymga. then how appropriate for lunch time? popcorn, chips, and nuts. diamond foods up more than 100% since the bottom and today's off-the-charts stock. and the bank tax in congress. a common sense way to repay taxpayers or a hindrance to the financials? welcome back to "power lunch." we learned from the mortgage bankers association this morning that interest rates? you're looking at a 30-year or 15-year mortgage moved down to the lowest level in four weeks. indeed a 4.34 yield on the 15-year mortgage is lower than it was one year ago. in terms of rates on sovereign debt in the u.s., look at a ten-year today hovering around 3.75%. look at a one-month chart, the lowest yield. should we close here? since about the 23rd of last month and on an intraday basis it is the lowest yield since about a month ago. if you look at other aspects of the market place, though, a particularly the greece yields they moved up but it didn't have a contaminating effect on portugal or spain so indeed we continue to monitor the driving force. it may be supply. there may be less of it. we might be hearing that in one of the treasury announcements over the next four to six weeks. tyler, back to you. >> all right, mr. santelli. thanks very much. i am here in earnings central which is an imaginary place. it really exists only in -- >> yeah. we just beamed over. >> we beamed over here. let's talk about regional banks. >> which are doing very well today in the wake of earnings. >> beatings and beatings. let the beatings continue until morale improves as the saying goes. let's look at three of them right now. huntington bank shares, big bank in the middle west, ohio, michigan and so forth doing very nicely today. one of the biggest gainers as of a few moments ago in the s&p 500. 15% almost higher at this hour. keycorp a beating on the eps. revenue was in line. and zions bancorp up by almost 6%. that one beating on eps. zions saying earlier today they are about to begin thinking about how to repay t.a.r.p. we'll have the huntington banc chief on. >> and returning to profitability. >> what they're saying is credit trends are improving across the board and boy if they're improving in huntington's part of the world. >> in ohio. >> michigan, indiana. >> yes. >> that's a pretty good sign. keycorp positioning for an improving economy they say and zions encouraged by recent credit trends. all good news in the regional bank area. huntington is one of jim cramer's biggest. >> he started recommending it at $4. >> he sure did. >> so it's gone up to nearly $7. it's a huge gain. >> the huntington banc shares ceo on in the next hour. we'll grill him. >> absolutely. up next, whiz facebook, ipo is when? everyone wants to know. the top developers are gathered in san francisco and julia boorstin is smack in the middle of the geek chic. >> there are 1500 developers here wait tog hear what the ceo has to say about the facebook platform. i'll be speaking to the biggest app developer after the break. will you friend me on facebook? it's the ipo investors are waiting for. online social network boasts more than 400 million active users. forbes says that has made the 25-year-old founder mark zuckerberg the world's youngest billionaire. a bunch of startups make games on top of that facebook platform and one of the hottest is zymga with more than 235 million monthly users playing its games. profitable, revenue almost doubled this year. zygma may be headed for an ipo of its own. julia boorstin is at the developers conference in california with the zymga ceo. >> reporter: entrepreneurs behind facebook's 500,000 applications are gathered here and i'm joined now by the ceo of the biggest developer on facebook by far. ceo mark pinkus is maybe a new face to us at cnbc but his games are not new. zymga now runs on facebook applications including farmville and mafia wars that many of us know very well. thank you so much for joining us. >> thanks for having me. >> reporter: your company is profitable. you've raised $219 million. your revenue this year is estimated to be around $460 million. how do you make money? >> we make money by providing free games that have virtual goods, that some of the users can purchase in the games. >> reporter: so 90% of your revenue comes just from virtual goods people purchase? >> yeah. that's right. >> reporter: so there are rumors you're headed toward an ipo. do you want to go public? >> i'm not sure where the rumors come from because we pretty consistently say that we don't currently have plans to go public. >> reporter: so what is your plan for zynga? you're growing fast by some estimates 35% a year. what is the future of this virtual games company? >> well, our future is tied to the future of social gaming and we're excited about it. we think there's an amazing opportunity to continue to innovate and bring great experiences to people, that give them five minutes of fun entertainment and let them connect with a friend while they're doing it. >> reporter: dennis, i know you want to jump in as well. do have you questions? >> mark, did you just hear julia say you have 460 million in expected revenue this year and that's just off people buying virtual little costumes or outfits for the games they're playing? or is there some other revenue stream, advertising or something? >> we have a very small amount of advertising today. we don't want to distract our users from the games and we're profitable just letting them have fun and find items they want to buy in the games. >> that 400 million is for items that i buy that only exist onscreen, is that right? they're virtual items or real stuff you're sending to my home? >> why do i get the feeling you haven't purchased anything in one of my games? >> you know i haven't. but i've got hundreds of requests to play farmville and mafia and it's driving me crazy. i got to tell you. >> well, i'm hoping that one of the things that mark announces today is narrow casting so that our feeds will just go to the people who are really playing the games and you don't have to see them if you don't play the games or don't want to. >> but i have a question. obviously here at facebook, here at f-8 your platform is built on facebook. you are entirely relying on the decisions mark makes about facebook. what do you expect to hear today and how could these announcements affect your business? >> well, the way that we've built our business and service over the last three years is we've been focused on building, engaging, social gaming experiences, bringing them to consumers through whatever distribution channel there is, and facebook has definitely emerged as the best one of those. i believe that people want social games and i think that facebook has a great opportunity and interest to bring those to all of their users but i also think that it's happening around the world. it's happening in japan and china and russia, so i think you're going to see it happen across the whole web and i think it's going to come in all kinds of flavors. >> all right. well, mark pincus ceo of zynga thanks for joining us. we'll have to see if you change your mind about that ipo. >> thank you very much. up next mike huckman has stocks making headlines right now and then we're all going to go off the charts. the stock that's up almost 110% since the bottom. we'll name some names. >> and coming up at 12:45 eastern time you know what it is. the fast money halftime report. just 15 minutes away. and welcome back. we are almost halfway through the trading day and in the headlines a