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say sts muscle when it's a pleasure to welcome a back to this program from of
rolling stone magazine uh...
say he was live blogging folks is last friday
uh... welcome to the program at a be welcome to the program at
got up and will you know
symbols sampled buddy at arm
it turns out now
let's let's just let's just take a step back here because it's it's it's a man
i don't know i don't know what's more amazing that we're route we're seeing
these hearings
of no
for five years six set
six years later
uh... uh...
later than probably should have been held unearthly maybe decades later than
they should have been held but
um...
of friday
the senate baking uh...
subcommittee
held the hearing where they invited
executives of j_p_ morgan to come up and explain to them
holidays
they suffered billions of dollars of losses on the server
trades that the iraqi cally machine not happened
or they should not have been able to i'd guess sulfur cisa losses yet hide it
and and and to allow it to continue right up such as backup just tell us
just you know uh... we've talked about this on this program in the past
obviously many times before but
one of the contacts
j_p_ morgan and jamie diamond are in the context of of this argument of too big
to fail banks because
scars i can tell i mean i watch that movie too big to fail jenny john and he
was like
use the one q cruel cucumber really getting right as far as i can tell right
yedda that there ever been led him to vote
about j_p_ morgan chase is that there
there the quote-unquote good bank uh...
and always builder
bank that have bad reputations
film called men um... young commercial banks like bank of america that
everybody
uh... although the company just grew up if you do it right you now you can be
like j_p_ morgan chase then
and it's not a problem and uh... you know there is
found institution i make a lot of money for america blah blah
the religion
the reason we're having hearings about the stuff that is
and this is a big question that that people don't understand what why are we
having hearings about the fact
that uh... a private banking lost a ton of money last year
uh... like we shouldn't care right
erratically
um... but we do because
jpmorgan chase
the commercial banking uh... which means that the federally insured depository
institution for the if it goes on there
um...
the f_b_i_
he is going to have to
bail out the bank or or as we found out in two thousand hailed it'd be
you know the whole government plus the fed and a lot of other people will be
bailing out the bed
so we have to care about it when days suddenly start acting like
high-risk investment bank
and lose tons of money and do it without the regulators having any clue
what happened in that
that's what happened last here
uh... at the beginning of last year at this met this guy hinder
in london
yet and he had made clear that hedge fund hidden inside of j_p_ morgan chase
and uh...
just sort of overnighted for losing billions of dollars and nobody knew
about it until
until it is at the newspapers an applicant hearings were about and it's
hard
the myth of rajiv gandhi
the uh...
the myth about
there being a
dank that is this big is that
uh... the implications are that it's not a systemic problem in the sense that too
big to be if failed banks are are problematic
but just that it's that you know we have some bad actors like a nanny
uh... in any
you know system there but
add actors in their good actors
and that depart eight this system but
so that's why it seems to me has been so
uh... why it's been so crucial
to maintain this myth
of a good bank because it's supposedly says
uh... we don't really need any massive reforms we don't really need to
uphold these banks apart many way because he can be done properly
and uh... this uh... it's quite clear that
that's just
offense
dot m predicted the government a panel indoors
this idea
during the crisis because
when companies like bear stearns and merrill lynch uh... and washington
mutual when they all
you know sort of circling the drain
or or what what if we do incentive
taking this company is over
telling them off breaking them up in the smaller banks
which is what
rationally you you can probably would want to do
is do
to make the content companies left dangerous
they just took the company admits stuffed them into the even bigger
companies
uh...
so you know bayer sterns
pushed into
into j p morgan chase
washington mutual get thrown into
into wells fargo
so the government of felt bought this idea that it open
it's not this
side to the bank of that
inherently the problem it's that summit some of these companies are
are more screwed up in a respond to what others so
what we can fix the problem but putting that that concluded that
and and and it turns out that that's not
if not bout the cave the sizes generally a problem
and we should add that
do one of the best examples of
notion that the size of the banks is problematic
is that our uh... uh...
as eric turney general came out the other day and reiterated what we have
heard
uh... now want several occasions that
you really can't hold these people
of to account for
are breaking because
they're too big and uh... if we get if we put any of these guys in shell then
uh... you know we're going to wreck the economy
so it sort of a classic uh... facts on the ground had a situation where you
make them even bigger
and then you know and now there there are there's nothing we can do about it
right yeah but but
it's kind of a
it's kind of an amazing
combination of moves right like for first what to create abbank
gigantic like chase
by
you know taking bear stearns and filling at the chafete some absurdly low-price
if you're a member of the government actually flashed up right to bear
stearns too
to ten dollars a share so that uh...
to that chaichana acquired in emmett
you know when it was last reading of the thirty hardly shared some or something
uh... so they take their cue
these these banks enormous
public support and bailout endif camp that they can acquire these other
companies when they turn around and they played like a couple years later all we
can prosecute you've got to go to bed
provoking enough to look at the combination of uh... of movement and
feel creativity
and uh... so he he started your um... your uh... your live by now with just a
reminder that uh...
that they traces kade
eight billion
in salomon's in the in in just the past well-placed three three-and-a-half years
they spend sixteen billion in legal defense vcs
during that's really period i mean this is
really
is amazin agile use the analogy before you came on that you know it may not be
fair to say that um...
there are a holy a criminal enterprise
uh... but i don't know what
days i mean even when people go to rob a bank
presumably they at pay attention to that the speed limit on their way there
alright uh... what tending to her their driving with a car that has worked well
i'd say you know itself again i fully accra middle enterprise
uh... but but but but
it it it should look it up
let's walk through this
his uh... over the course i mean your assessment of the hearing in my
estimation was that you are pretty impressed
we ate bout the job that the senators did
and you see
this hearing as pretty important at this point
what what im uh... heading to bed
there's been this kind of change of heart
in washington
because i just keep hearing
that
different staffers working for different congressman and and feta and different
voters
coming around on this issue of too big to fail
there are both republican and democratic senators who are starting to cut a creep
over
across
to the other side away from the bank from out of the five of you
cheaptickets something about this um...
it's a third they're continually applying pressuring then and the you
know
by taking on shape
head on
uh... n_j_ disposed to be a good day kinship of is is
all bombing quote-unquote favored banker
uh...
that there was a significant thing that carl levin do it if it's one thing to go
after
uh... you know some road company but they went after the the most reputable
of the too big to fail banks
and they basically did an autopsy delivering autopsy about how the
accounting at these companies work
and they showed everybody
that they weren't zero internal control but the company to know
you know we have a absolutely no idea what's going on
and uh...
and that just explode everybody'll to the danger that war and that i think a i
think even
it's it's going to become a book the conservative and uh... down the liberal
issue because neither
you know the the liberals
view of it is going to be with the one i have to view not support the dual
corporations but the the conservative you with
why should my tax dollars go to support
you know that this kind of allen activity you know they should be
thinking this woman in the market
uh... so i i i just think it's significant infant that
there are more people moving over to the left side of the before we go into a
breakdown
uh... these hearings what do you think cals for that
i mean and you know dat
what
and in what what accounts for that because he used to me that this
information has been more or less out there uh... and you know from
from my perspective that we have well uh... well what do you think accounts
for amy do you think it's simply because where now outside of uh... in some ways
were outside of a lot of the accounting uh...
that that could have taken place within the statute of limitations for all the
mortgage fraud
do you think it's things like
uh... departed yeah that documentary the untouchables and some level seemed to
have their before one thirty e_s_ but
but you know uh... uh...
i think it's uh... to get the budget uncovered number one
i did wall street made a big mistake when they
uh... one may abandon
the democrat
in this uh... election feeding
because b
what they traditionally do is smart they just throw 'em pump the money of both
side
and they don't really make a directional bed on politics mimi
i believe that uh... they usually bed according to blow up to eighty five
other words if
it'll bolivar seventy three
uh... you know
bet to win over john mccain either to get a lot of seven dollars mcclemon came
three dollars
but the fact of the way they're always operated at the bottom nothing do with
politics
it's just purely we picked up a good bit of women that i have been
this time around i didn't do that even though obama with the heavy favorite
they they're really supported
um... romney
in the collection and so allot of democrats
more scratching their heads afterwards with them
*** of you know we move will need to have been carrying water for this
country years and we've been helping them in
we watered down the dog frank packed and we've got all that we bailed them out
and bare mai cotton ran on a in the election fever so what are we doing
um... there's that
and then i think the major thing is that there
the people who work
in the said and in the regulatory system
are
increasingly
screaming bloody *** about all the stuff i mean there are there are it's
not just the dallas that anymore there with the uh... new york
uh... federal reserve bank official who gave the pretty big speech
in the fall about out to be too big to fail of understandable
um... n the emu wharton their building company to make a political living wills
in other words
he knowed a plan for what happens if your company goes out of business
and the fed determined that these wills were complete fiction that the
they'd didn't do a good job
um... and so everybody's worried you know that i think it's it if you have to
do with the general fear that
these guys learn nothing after two thousand made
the or director continuing to support themselves with massive amounts of free
government money and you know when they blow up we're going to have to go ahead
and and pay for all this again and we don't have the money to do it data
system for that i think people are just worried