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tv   Prime Interest  RT  July 4, 2013 12:29am-1:01am EDT

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sighed into law a twenty three hundred page be a moth that was supposed to fix our financial woes x. goldeneye gary gensler was given regulatory control as head of the sea up to see over the lion's share of the seven hundred trillion dollars derivatives industry and he is situationally went to task on creating thousands of new regulations but he forgot something he was supposed to stay on top of the futures industry which is why this si up d.c. was created in the first place that see it stands for commodities so his old boss at goldman sachs that would be drunk or design who are going to profile today he blew up on the global and he threw the entire futures industry into disarray and mr gensler did nothing for four days then promptly recused himself from the entire matter we're going to talk about this with james could tulis president of the commodity customer coalition in just a bit well gensler is on the way out ever had after having lost a major battle over to reduce regulation with his fellow commissioners in just nine days a key provision that governs the ability of u.s. banks like j.p.
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morgan to skirt dodd frank it will expire if the exemption is not renewed really ends and derivatives could be thrown into disarray meanwhile the latest jobs report beat expectations today good news right wrong at least for mr market because that means the fed might be getting out of the money printing business sooner than expected it's a topsy turvy world we're going to lay it all out for you today as we deliver what's in your prime interest. almost two years after he tanked m.f. global john corazon read. turns to the spotlight in two thousand and eleven the
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former new jersey senator's firm dipped into customer accounts in attempts to cover losses on european sovereign debt trades a scheme with uncanny similarities to our favorite ok playing juvenile delinquent. if you had access to a car like this would you take it back right away. neither would i. well corazon had access to the m.f. global car borrowing customer money for short periods of time usually returning it by day and that is until and until the car crashed and dealer i mean corazon he got away scot free now earlier i spoke with james cook tulis co-founder of the commodity customer coalition about the new c f.t.c. suit against john corazon i first asked him if it's possible we will see criminal charges as well. and legal opinion but he definitely committed crimes and m.f. global and i think it's encouraging to see this. as a step and now. done just about all they could do on the civil side but now
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it's up to the you know jane to do their job and as we know unfortunately we have an attorney general. i don't think really the country's best interest of our and hasn't done a very good job prosecuting financial times so he has involvement in. wire taping orders. but really it's now on her shoulder. to try to act like he's not completely corrupt and then a perjury case which is ongoing i think it's easily when all or more difficult. well let's talk about your last part let's talk about the possible perjury case now john corey's mind was in front of congress he basically said i didn't know what was going on dude there is new evidence out in the civil case that kind of contradicts that so what is that evidence and how could it be used against him. sure i mean
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there were personally i thought there was enough evidence for perjury trustee gettin releases or or. about a year ago. or it shows the corps i was intimately involved in the cash management activities of the firm he knew. how summer money was a risk paid for the bank when he went before congress he said well i simply don't simply don't know where the money is and we know from those that see if you see compliant cites numerous recorded phone call he knew damn well where the money. and also the trustees report showed that j.p. morgan's chief risk officer barry super zero call corps on three days before the bankruptcy to say hey we think customer money is at risk here j.p. morgan was the custodian of a customer i mean they were going to say i'm. basically m.f.
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global's sent two hundred million dollars i believe over to j.p. morgan and then j.p. morgan want wanted what's called a comfort letter that said this was not customer money and the person handling that was laurie ferber she's an ex goldman sachs employee who at the time was the general counsel of and that's global and she kind of hemmed and hawed over the weekend as i understand about that letter and it was never signed and i'm just wondering why are we seeing any charges against her. i think that's a good question and quite frankly i think from day one for bernstein camp. oh and right level have really gotten in explicable path and i believe they were all paid by louis freeh who is the trustee for the chapter eleven eleven and three cited. privilege and so now federal authorities are investigating
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some documents on their behalf even though these these two players were right in the middle of this whole. fraud. as high level executives let's talk about them basically because of the bankruptcy structure maybe you can talk about this a little the foxes were allowed to rule the hen house in those early days i mean can you talk about the problems with chapter eleven versus seven sure a chapter eleven is known as a reorganization type of bankruptcy where a company is expected to emerge after restructuring that we just saw a.m.r. go through chapter eleven with ironically the same judge. as i'm all judge glenda new york but they want to chapter eleven to renegotiate their contract with their pilots and their union haulers and things like sams there you have a legitimate business here that has some kind of chance of going on but that was not the case with m.f. global. exactly and the day before the bankruptcy laurie ferber who is m.f.
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global's general counsel sent e-mails to the f.c.c. m a c s d c and they came and there was a significant shortfall in the customer segregated accounts yet the next day november first in bankruptcy court and the locals bankruptcy council cans them on ad and went before the judge and misrepresented saying that there were no. he specifically said there was no shortfall in the broker dealer and then if the f.t.c. attorney stood up shortly after that nobody corrected this and there were headlines out that day that said the money that there's no shortfall and this was one of the events that led the futures industry into a shortfall after it was discovered that there was a shortfall so i mean you started out with the customer commodity customer coalition you helped found it to deal with the fact that there was nobody looking out for the futures industry at that time and what was it like in those early days
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i mean it was absolutely. i'm a licensed attorney but i've never practiced a day of all my life i've never taken a class on bankruptcy so at the time i'm a thirty year old hedge fund manager with no experience whatsoever but due to this complete boy customer happened i was put in this position where. i was essentially directly representing ten thousand customers and indirectly representing the entire class mearns and having to go up against the morgan and louis freeh who was the former director and i think if you're going to actually credit cancel one of your credit cards after you started this whole movement. yeah it was funny i was on the n.b.c. outlining all the conflicts of interest j.p. morgan had in the bankruptcy being that they were clearing agent from what was proper and they were their biggest lender. they were the custodian of the customer
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on the and they were able to go into i am a global stock and in the one metals exchange. some opaque process in the u.k. they were also able to. trade. or resign yeah it was on the dollar store and they got a really nice deal out of i didn't say you know they made like six percent. so and i was pretty good trade for them again with no oversight. so i almost say and i'm walking home to buy my girlfriend flowers pay my credit card klein next day i get a letter in the mail saying that they wish all my my checking accounts all personally and for our edge. and that my whole income a good amount in the bank and i rent a car had been terminated and retaliation i guess the message is don't mess with jamie dimon and he's feeling a little bit more heat now these days let's talk about gary gensler he was the head
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of this the f.t.c. at the time he still is and he's another ex goldman sachs guy an inspector general report came out and said that it was not necessary for him to recuse himself and was when he was at the helm of the c.s.c. i think one of the problems was there was a lack of leadership and the inspector general came out and they said he doesn't have to recuse themselves is gary gensler. is here that the epitome of the regulator who has not done his job. i mean look i'm no gambler fan just to play devil's advocate once back after him he was kind of damned if he was you know damned when he was all there given his relationship with i feel that if you never use them then we'd be talking about how or if i got special treatment because again lerner was still involved right so i mean he even have a great option there but the timing of his refusal is a bit a cure all year and that he waited about four days after the bankruptcy guys are
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accused well and this was after the basically see f.t.c. gave the handling of the bankruptcy over. which is security insurance company. rather than same as the f.t.c. should be involved despite the fact that there were only about one hundred million and the securities that counts and i will versus about six point four billion and. right i think there are maybe three hundred accounts total in the securities accounts forty thousand stooges accounts and let's talk about that we've already talked about the problem with the bankruptcy structure of the holdings company but there was another company and that was m.f. global and that was the brokerage firm where all the customer money was and why did we see a securities industry protection association resolution of what was really just a futures brokerage firm. yeah i mean the system basically argued because we're insurance part of this we should handle the bankruptcy and the law isn't one
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hundred percent clear as to whether that's the s.t.c. would have had to step aside or not but they did essentially step aside. and that made things very difficult in the early going so we had given this instilled a trust there and he had handled lehman which you've built about one hundred sixty billion in fees for him for handling lehmann and then goes in and all and they don't very good job transferring. margin positions basically like a day or two after the bankruptcy but then given that said we're only going to get a customer sixty percent of their money back. nine months after the bankruptcy. stay tuned because we're going to tackle more m.f. global john corazon shenanigans with the president of the co-founder of the commodity customer coalition the james cook tulis ben perry and boring profiles a done himself john honey i blew up the futures industry corps i finally i will
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duel with our t.v. producer rachel curtis us over the role of uncle sam in health care and housing. so basically when the saudis or the you rockies or the do or the turn of the companies when they provide the soup invest providing for their own said that the same d.n.a. that cousins use shared language to share of a faith to share a culture and tradition now what you're saying is that because you are an arab because you are a muslim you for some reason have the same right to protecting the syrian people but to me it sounds just as you know condescending as the bushes claim or seems to you know supposedly kyra responsibility here.
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teach.
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well we are back with more of my interview with james catullus i asked him what needs to be done to increase confidence in the futures industry here's what he said . to do one justice. would be going to hell you know seeing him behind bars would show that even if you're a friend of the president if you break the law you go to jail we haven't seen that yet on the regulatory side there have been a number of. my organization or coalitions currently working with several members of congress including the house and senate acrimonious as part of the body exchange act reauthorization what changes are you trying to put forward. are. big change.
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the way customer funds are and all bankruptcy if there happens to be a shortfall in the customer accounts like we saw them out which was unprecedented of us and but it draws it begs the question you know if this was an unprecedented event can we actually fix the bankruptcy code is what you're doing going to be able to overcome the changes that were made back in two thousand and five and can we finally see protection for the future as customers. yeah i mean training the bankruptcy code is very difficult. basically the kind of one precedent that's against commodity summers comes from a. broken train and i have a ninety nine i am aware of. a case of a shortfall in customer property trust general creditors from from a balance that ruling was later. after a settlement our customers all their money back on was cited. in this case so what
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we're trying to do is create a future subordination where if there's a customer shortfall all of our lenders would then have to wait until customers. get their money back in order for them to get it and that would result in much quicker return than what we saw and i don't know more so you know. that was my interview with the president and co-founder of the commodity customer coalition james cook to us. i i i i. one of the most miserable experiences can be he said she said tips is one person's word against another and
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with little evidence and evil doer can walk free however i think some business is extremely important and sometimes these tips can ruin a well let's talk about m.f. global let's profile john kors on the missing customer funds are is still a contentious issue brokerage firms are required by law to have customers funds in segregated accounts to safeguard customers assets however it during a liquidity crisis at m.f. global over eight hundred million dollars of customers funds were transferred from a customer accounts to a broker dealer accounts and then c.e.o. john corazon denied having any knowledge of this when questioned by congress. i was stunned when i was told sunday october thirtieth two thousand and eleven the name of could not and this global could not for many hundreds of millions of dollars more simply do not know where the money is. but not
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everyone is buying his story u.s. representative michael grimm is calling on the attorney general to bring criminal perjury charges against him for m.f. global this is based on evidence filed in a c f t c complaint that corazon spoke to an employee by a telephone telephone to strategize how they could use customer segregated files to clear m.f. global's trades but this isn't the first time john corazon has tried to conceal his affair as governor of new jersey he spent approximately one hundred twenty seven thousand dollars of taxpayer funds to keep e-mails between him and his girlfriend car like cats secret carly cats it was the president of an employee in charge of communications labor union and this union negotiated a labor deal with ministration and allegations of potential conflicts of interest
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during these negotiations were brought up against and it ended up being ruled that of course i did not break the governor's code of conduct but he did manage to keep the majority of these e-mails sealed mind you carla katz was married to someone else when they met john corazon and it was married. for thirty three years they have three children joanne was quoted saying that john did what his family down and i'll probably new jersey down to regarding his affairs with the c.w.a. president katz another act of concealment from corazon was when he ran for u.s. senate in one thousand nine hundred and he refused to release his income tax return records claiming a confidentiality agreement with goldman sachs it was the former head of goldman and it was back you a. he did that he had a politically and popular investments but nothing prevented him from putting his investments and a blind trust course on was indoctrinated into the goldman i clam in one nine hundred seventy five when he was hired as
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a broker trader over two decades he worked his way up to chairman and c.e.o. he's responsible for converting the firm from a private partnership to a publicly traded corporation he made about three hundred million dollars on the partnership conversion better the firm went public coast c.e.o. henry paulson forced him out and this is when he went through the revolving door and turned politics he was a democrat from new jersey in the u.s. senate for five years he then ran for governor of new jersey i've been losing his real act as governor he had up its ally from his golden days days the flowers who helped him into his position as chairman and c.e.o. of m.f. global powers own a temperance per cent stake and mask lobel and was actively engaged in the last minute negotiations of until m.f. global declared bankruptcy the missing customer funds have pushed john corps and to another my word against his argument did he know or did he not know that is the
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question that could put corps i'm behind bars but now we know a little bit more about the profile of john quinn resign. welcome to the daily dual joining me is rachel courageous or two producer thank you so much glad to be here all right we've got a couple stories we're going to talk about today this one is from w.s.j. healthy consumers could see. insurance rates double or even triple when they look for individual cover under the federal health law later this year and while the premiums paid by sicker people are set to become more affordable and this is according to the w.s.j. again the exchanges the centerpiece of president barack obama's health care law
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looks likely to offer few if any of the policies that healthy people can now buy so according to the journal's analysis top prices look to be within reach for many people who previously faced sky high premiums because of chronic illnesses or couldn't buy insurance so what's going to go on here well here's what i think i think first of all for people who are say feeling like they're going to be paying higher rates before previously for those people who were not covered by health insurance at all because of chronic conditions it wasn't that they weren't getting medical care it was that they were going to the e.r. at the last possible moment when they needed it and the government was obviously paying you know we certainly have a convoluted health care structure because of the laws and this gets but this gets back to the one nine hundred fifty s. and sixty's there were improper incentives and when it's kind of like the income tax people don't realize how much they pay an income tax because it's automatically deducted people don't realize when they take a job how much of their money that they could be getting otherwise is going to health care so people really don't have a choice in the system that even was before this latest the only service is going
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to do that's much better is that people who have chronic conditions or yeah i think that people have chronic conditions who are now able to get preventive care is actually going to lower prices in general also the individual mandate which was pay for all this people are already paying for it to say that the government isn't already paying for it is ridiculous what the government in our the government pays for ok but the government cannot continue to pay for it if the government is going to have the health care act rightists even if we can't continue even if health care costs are going to rise civilizing rise at a lesser rate than they would have otherwise so listen i'm not going to sit here and defend the intricacies of obamacare i do think that that's a losing argument but what i am going to say is that the government does have an obligation to provide people with health care and if they are providing people with preventive health care and healthier choices from the. echo that means that their costs are going to go down later on ok the problem is i stand by my assertion this cannot continue forever especially when interest rates rise but i'm going to move on to the next subject and this next story this next story is from forbes if you
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feel like you already paid for the financial crisis once or twice you might have that same old feeling so with failing institutions lost investments foreclosed properties and taxpayer funded bailouts taxpayers got it every which way and now they could be getting it again citigroup says it will pay nine hundred sixty eight million dollars to fannie mae to resolve crime claims that breach representations and more is on three point seven million residential mortgages and this is now three point seven million dollars three point seven million mortgages they really must stop here and they're paying one hundred sixty years in the u.s. up here i mean buybacks have been an issue for banks ever since two thousand iraqis are precisely and i think that having a settlement like this is good news because it it gets rid of some of the confusion banks have been putting aside their quarterly earnings significant money to have to deal with these buybacks so that they're not out of the federal reserve is subsidizing these very big i think we've seen a zombie bank structure especially with the too big to fail banks and we're in a much worse situation than we would have been had they been allowed to fail in the first place and face these very same thing i think that with fannie and freddie in
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particular there's a huge question of what we're going to do with them right the dot frank bill didn't mention these government sponsored enterprises even though it looks like we might even get a new entity so why why bother getting rid of printing freddie if we're just going to do the same thing over it if it's it would be funny and freddie by another name and i think that there's a really good it's most we i mean it would perhaps but i think that the question here is mainly you know freddie was brought in to the equation much later on because the risk right exactly because fannie was getting so big and so powerful i think that the main thing the government can do here is make that implicit guarantee explicit guess what we've got to wrap this up rachel thank you so much for joining me if you want to weigh in on today's show be sure to like us on facebook at facebook dot com slash prime interest and don't forget you can follow rachel. on twitter at sirius underscore rachel and you can follow me at anguish p.-i rachel thank you so much for joining me today glad to be here.
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it was a kafkaesque day here a prime interest we learned there's no honor for old new jersey senators who rob peter to pay j.p. morgan and ferber ferber we got your number and much like the alamo we will not forget dodd frank turns three and is going through some growing pains at least we know that they're in the terrible twos and kafka himself turns one hundred thirty which would actually be a decent sentence length for john the done corps i would that the new deal jay finally get its act together and get serious about these bankers guys and go well it's us independence day tomorrow and we're going to celebrate independence we once had and you're in for once more and the fed thanks for watching and make sure to come back tomorrow and from everyone here a prime interest of a great night. wealthy
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british style. time. market. find out what's really happening to the global economy when mike stronger the no holds barred look at the global financial headlines kaiser reports. listen.
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the speech. will. look. good. and i'm. fine i'm a little. the
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country. from the world of big.

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