billions of dollars in penalties. olivia: god who has some text problems. signals that the irs may not investors do not know what to think. olivia: six banks pleading guilty to market manipulation agreeing to play -- pay $5.8 billion. all leading guilty to currency rating. ubs is guilty to manipulating interest rates. they are runs the doj's antitrust division and he'll put the case together. he joins us now. bill, thank you for joining us. we heard attorney general lynch say that the penalties were

fitting. what determines a fitting penalty? bill: a fitting penalty is based on the loss each of these banks caused to market participants. these markets are $500 billion a day markets. even a slight manipulation of the rate, a few basis points is loss. to create real they created a methodology to estimate that lost and in turn we adjusted the amounts to be paid by each bank based on the length of time each participated in the conspiracy. pimm: i'm wondering if you can talk about some of the techniques you are using. the technology you're using to find algorithms that fix prices and various other types of technology used to find out who is doing wrong. market, it was the work of the fbi that was able to take these communications that

occurred in chat rooms online and then connect the chats with the trades that occurred minutes , sometimes seconds after the participants in the chat room agreed on it. it takes a lot of expertise but they've to the folks at the federal bureau, we had it. olivia: these numbers are hard to get your head around. six banks agreed to pay $5.8 billion. where does the money go? bill: the money goes to the treasury and if it is a criminal fine. that money is redistributed to victims of crime. organizations that provide assistance to them. the money does not go to the justice department coffers. it goes back to help people who are the subject of crimes, including violent crime in the united states. olivia: but not connected necessarily to libor rigging.

how do you get to these numbers? bill: the numbers that the criminal division imposed are under $3 billion in criminal penalties. it was taking a look at the average daily market movement that these folks were able to achieve during the period of the conspiracy. it does not take more than two or three basis points to have an impact on customers and other traders. we estimated that and that we took a look at how long each bank, citibank was in the largest -- in the longest, and adjusted the methodology for the days each bank participated in unlawful conduct. pimm: what are culpability of specific individuals? occam no one ever seems to go to jail? -- how come no one ever seems to go to jail? bill: a substantial number of individuals have been charged. three have pleaded guilty.

mine are awaiting trial -- nine are awaiting trial following indictment. continues.gation this one chapter in the story. olivia: two and a half years ago, the justice department declined to file criminal charges against hsbc for conduct that many would say is worse. they cited the potential trap -- potential threat of collateral damage. what changed? bill: we were confident that these banks could be held accountable and should be held accountable for criminal antitrust violation without having the financial system collapse. ,e have seen in the last year the justice department has brought criminal charges against financial institutions involving other sorts of crimes and were any to do justice without

systemic failure to the financial system. pimm: you have worked on cases antitrust related to e-books and apple and publishers. i would if you could tell us how your thinking has evolved when it comes to antitrust, specifically in the world of mobile carriers. bill: we look at each set of facts on its own. if it is a merger like comcast, time warner, we take a look at the market and potential for that merger to have an adverse impact on consumers. with respect to criminal antitrust conspiracies, that is a look back at what happened. were people injured? how long-standing was the crime? what senior management was involved? each case is specific to the unique facts. we need to investigate it hard and we need to be prepared to go to trial if a defendant, a corporation or an individual,

puts us to proof. olivia: at the end of this investigation do you get the feeling that this type of market rigging was basically always going on? it seems so pervasive. now it is being prosecuted because there is a paper trail length to e-mail in chat rooms. bill: we were able to uncover this due to the use of chat rooms and connect the trades that occurred after these communications. we look hard and we will continue to look hard at this pattern of behavior. part of what we are doing with these guilty pleas is putting these banks on probation, forcing them for the next three years to observe more strict financial controls. much stricter reporting obligations. the signal here is that the colebrook culture -- the corporate culture that led to

this behavior needs to stop. pimm: as someone who came to the justice department in the antitrust division i would if you can explain how you reorganized the division in order to fight these antitrust cases. tell us about the organization of the division. bill: we divide our teams into folks who work on civil cases, the e-books case, our case against american express. and that we have a team it of prosecutors to look at hard-core primitive -- criminal pricing. sequestration and are hiring freeze. now that our appropriations are resolved, we are back to pursuing investigations vigorously and trying to get positive outcomes for the american consumer. pimm: i understand that in hiring at the justice department you're focused on gathering experts such as economists to join you.

of phde have a group them,ists, almost 50 of that help us do the sorts of analytics. when we are dealing with a price-fixing case, they help out , but's over agents at the federal bureau of investigation that have expertise. we work together as a team. pimm: thank you very much. olivia: michael mayo, managing director at cs l.a. americas. this is at the fbi. >> the criminality occurred on a massive scale as individual traders at the bank communicated in code and exclusive chat rooms to set price-fixing on daily basis. the activities of these traders undermined transparent market-based exchange rates that serve as a critical benchmark for the world economy. olivia: mike mayo with is onset.

was the fallout from the bank? michael: the criminal action is terrible. it is a scar on the entire industry. i think it is great that the individuals being held accountable are still going to be followed up. having said that, we are in the ninth ending. when it comes to citigroup, they lost the game several innings ago. i testified to congress in 2002 about the cultural issues at citigroup and other banks. we heard the assisted attorney general say he is trying to encourage the justice department is trying to encourage a cultural change. the cultural issues that led to today's settlement go back about 15 years. we have talked about them. better late than never. citigroup's press release says they are embarrassed. they should have been embarrassed in 2002 and the past decade over the actions they

have taken. i think we are at a turning point for the industry with the cultural change that is being encouraged at the top of the company. olivia: is it the night inning? what about the commodity market rigging finds? we just had brett hence who said this opens the floodgates for civil litigation. michael: with all the mortgage settlements, we have had a lot of fines. it is a chance we go to extra innings. the bulk of the fines have been paid. .s terrible as it is there is no excuse for citigroup and the bad behavior that led up to this. they are reserved. when the ceo stood up and said we are turning a new page, everything we work for the last couple of years should play out in 2015. it is still playing out. the stock is relatively flat today. pimm: criminal cases and

waivers. this idea that you can plead account butcriminal then you get a waiver to conduct business without it ever really affecting business. what are your thoughts? michael: in the end, today's settlement is more symbolic than anything else. this is the first time you had citigroup, jpmorgan or any u.s. bank plead guilty essentially to criminal conduct. this is a bad day for american finance. having said that, this is more backward looking than forward-looking. a lot of remedies imposed on the banking industry. pimm: if this was any other industry, do you think that the outcome and publicity would be different? you think someone would be going to prison? michael: i think some individuals are still being pursued, as they should be. if you break the law, in any industry, you should be held accountable. i think the regulatory pendulum

far,whole, has gone too not necessarily in today's case but we are in a big other banking environment. pimm: if you have board members signing off on annual statements of banks, do those signatures not mean anything? don't they have to vouch for what it is they are signing? michael: i was one of the ones who testified as part of -- back in 2002. you cannot say i did not know. i did not know is no longer an excuse if you are a ceo and if there is material financial issues that need to take corrective actions. in this case i think it is less -- sarbanes-oxley, if that law action.lated, take are there any consequences to the guilty pleas

investigators are underestimating? michael: i think the interest in attorney general -- i think the assisted attorney general said it best. andia: ubs was on probation the doj ripped up the deferred prosecution agreement. michael: that is part of the criminal process. olivia: why would anybody think they're going to do anything different? they can afford these funds. -- these fines. michael: the way i understand it is there is one trader at citigroup that caused these problems. they fired nine people. a firm with over 200,000 -- olivia: the bank's response will for supervision. michael: it goes up to the ceo level. the ceo is saying this was an embarrassment. is there someone else accountable, a supervisor they have not gotten to come and they should get to that person. olivia: mike mayo, thank you for joining us. the road forin

yahoo! as the company plans to spin off its ali baba holdings. have the internal revenue service could stand in its way. ♪

olivia: walking back to the bloomberg market day. i'm olivia sterns. pimm: i'm pimm fox. olivia: a look at what is happening in the markets now. .ulie: staples a bunch of retailers with earnings recently and staples reported this morning. the company says second quarter earnings will be $.11 to $.15. it says second-quarter sales will be down versus a year earlier. shares are off by 1.4%. american eagle outfitters. doingtailers have been

dismally over the past several years. american eagle beat estimates and said second quarter comparable sales will be in the high single digits. those chairs are giving a boost of 5.7%. tumbling.s are they touched below the ipo price of $16. etsy intraday is $16 where the shares came public. 22%es are up by more than after it came out with its first earnings report as a public company and said it lost widened. olivia: thank you so much. top stories crossing the bloomberg terminal. senator elizabeth warren wants congress to play hardball on that asian trade deal. in an interview with bloomberg television, warren said that congress should demand that president obama released a draft

of a deal before he gets fast-track approval authority. the president's former chief of staff says it is not going to weekend the dodd-frank law. >> the thought that this president would undercut takenrank, which she has an endorsement of heat from those of us who are in the financial service sector for parts of dodd-frank, is ridiculous. olivia: mitch mcconnell says he wants to vote on the fast-track trade bill this week. pimm: united technologies is talking to buyers -- potential buyers for its helicopter unit. boeing, lockheed martin and airbus. it makes the presidential helicopter known as marine one. olivia: millennials may become wall street's best friend. tobias laquon

which. he says people move into their saving years between 35 and 39 and millennial's are almost there. this year millennial spot pass baby boomers as the largest population group. pimm: yahoo! may have a problem with uncle sam. the irs signaling it has concerns about person may or's plant -- about morrison mayor's land to spin off alibaba. olivia: cory johnson is with us from san francisco to do just -- to discuss. how good these potential changes damage yahoo!? cory: if the irs does make these kinds of spinoffs illegal or taxes them according to capital gains, it would be a disaster for yahoo! because they have spent millions of dollars contemplating the different ways

and hiring advisers to figure out the different ways they can create this deal. they think they've created a methodology for the good spinoff this business into a separate unit and because of an operating business involved in the spinoff as opposed to equity or something. believes that they are complying with the letter of the law and that it should be tax-free. their capital gain on this thing is enormous. tens of billions of dollars in profit on this investment. when the word of this potential irs review of the practice, not of yahoo!'s specific case, the stock tanked. it was not until later that yahoo! came out and made a think theirt, they application of the irs was before the statements of the irs. yahoo! understands the statement is not specific to yahoo!'s

plans. but snow change and applicable law and is not -- you who continues to work towards continuing the plans. olivia: i wanted to pull up that two day chart again. investors do not know what to think. cory: the statement -- it is not just a spinoff of alibaba. it is a spinoff of ali baba plus yahoo!'s small business. yahootub of yahoo!, that small business is what yahoo! thinks makes this tax-free. thee is a natural blend of piece of ali baba we own and the small business and therefore it should be tax-free. the irs, maybe they will review deals in the future. they are not said how this will apply. don't we have examples in

the past of companies doing this? isn't that the morris reversed trust scenario? the spinoff of folders to jm smucker? that was done using this -- the -- folgerssmucker's to jm smucker? cory: we have a loophole in the law and with a look at this. from what yahoo! is saying, this will not apply to them. the irs is not saying anything about health -- about how this will apply publicly. clear statement saying any changes in the law will not affect us. they will have their feet held to the fire if approved otherwise. pimm: cory johnson on ali baba. olivia: tim and i will be back in a moment. ♪

pimm: the stories that financial professionals are interested in today. a few of them here. one about american airlines. in an interview with bloomberg news, doug parker said the airline will compete against discount carriers that are piling on added seats. that sounds at the beginning of a price war. olivia: that's a good news for me. pimm: the planes are about 85% full, carrying about hundred 22 million passengers between june and august. the airlines have also -- airline stocks are down. airlines have said they are going to withhold certain bits of information such as scheduling and fares from these

third-party sites such as tripadvisor. airlines got a blow from the u.s. government because they said they are going to allow the expansion of the persian gulf carriers in the united states. olivia: several reasons why we are seeing a drop in the bloomberg airlines index. pimm: are you going to travel now? olivia: the weekend. it's wednesday. i would like to leave. it is pretty obvious. pimm: always a pleasure. mark ahead, target versus -- target versus walmart. ♪

pimm: welcome back to the bloomberg market day. markets are closing in europe. let's go to john farrell in london.

-- jonathan ferrell in london. jonathan: banks behaving badly. some big fines. the big story is the bank stocks. the ftse 100. work we stocks pushing high up at 3%. more than covered by existing provisions. talk now is about provision right backs. 1%./10 of coming off the back of the best two day rally since january. dead flat through much of the trading section. i'm looking at a weaker dollar monday. a weaker dollar tuesday and a weaker dollar wednesday. one dollar, 1096. .hree days of losses the biggest plunge yesterday since march for a single

currency and the euro bears are making more noise. morgan stanley, the most accurate forecast, still calling for euro dollar parity by the end of the year. pimm: euro-dollar parity. thank you very much. let's take a look at top stories. prosecutors called it an invitation-only club. traders at some of the world's largest banks got to go to rake foreign currency rates. the federal government find those banks $5.8 billion. citigroup, j.p. morgan chase them up ankle ease -- barclays and royal bank of scotland. loretta lynch said the punishment was appropriate. >> the penalty that all of these banks will now pay, considering the nature of their anti-competitive conduct is commensurate with the harm that was done and should deter

competitors in the future from chasing profits without regard to fairness, the law or public welfare. pimm: prosecutors say traders called themselves the cartel and that they used online chat rooms to discuss their positions just before rates were set. some european policymakers are sounding up the about the chances for a deal with greece. the economic minister -- the european union's economic tsipras willlexis be at the european union's summit and let the a. he plans to present a new restructuring plan. altice is expanding to the u.s. cable market area it is agreed to by 70% of southern linc communication. southern linc has about 1.5 million customers in more than a dozen states. altice has approached time warner cable about a possible takeover.

talks are still in the early stages. would you like to buy gasoline for under three dollars a gallon? go alley when he -- go anywhere but california. drivers in los angeles are paying more than four dollars a gallon. because of an explosion at one of california' ease and repairs at two other refineries. california has a strictest clean air policies in the country which makes gasoline more expensive. , find out what avenue capital management chief executive and hillary clinton backer marcus last 30 -- mark -- mark lasry. more on the usga's partnership with fox sports.

in the next hour, much more on those ilya and dollar fines in criminal charges against some the world's a gift banks. are now these just the cost of doing business in the financial industry? target posted first-quarter earnings that beat estimates. the chain cut canadian operations in january and refined in-store selections including the popular lilly pulitzer label. a profit ofrted $1.03 per share. i'm joined by j margolis, the former chief executive -- he is held as a kid approved missions at -- executive positions at .ommy hilfiger i want to begin. there is not a job in retail that you have not had. whose job would you like to have right now?

would you want to be running home depot? why are they doing so much better than lowes? the oneseems to be everybody is betting on for the future. i think the home category is a great category. people staying home, they're spending money on homes. tech homes seems to be where the money is going. pimm: who is creating the experience? the better consumer experience? visit the price? -- is it the price? the customer service? who is winning, who was losing? liz: home depot looks better this quarter. i think it is about customer experience three of is also about treating employees well.

i spent a lot of time listening to home depot founders talk about their core philosophy and it is putting those employees first so that they provide excellent customer service. at think a lot of those things are what we are seeing come through in the numbers with home depot outperforming lows and walmart underperforming target. pimm: what can we learn from what target is doing to revamp themselves? jay: they had a bad hit in canada and then all of the data preaching that went on. breaching that went on. kids apparel grew exponentially. it is about creating excitement. walmart wins on price point and the compete against amazon. amazon takes a lot of market share from walmart. they are not winning on the apparel side. target comes up with creative offense, gets customers -- , get customers

in there. part of this game, the people are creating a better army channel experience. getting the consumer out and into the stores. channele army experience -- omnichannel experience. they seem to be recognizing if you buy something online at walmart, you could pick it up at the store. liz: i think that is something they are working on. i think target did better this quarter with almost 40% growth in their online channel. i think the on the channel going away.l is not we are seeing brick-and-mortar stores integrate that online .usiness i think that is going to be a continued focus and a way that all of these companies can win.

pimm: we see some e-commerce figures that highlight what you were saying. see if you can connect it what is going on at williams-sonoma. you mention the home category. there is the home category and then there is the other home category which is more margin intensive. jay: i think restoration hardware has done a great job. the pace level is impeccable. consumers will spend the money for something they perceive as special. williams-sonoma, more thing sunita on a regular basis. it is different than a restoration hardware experience. both rolling out in-store and online businesses. liz's comment, the winners are going to have all their channels clicking. that mobile device is in front of them, telling them where to value.re the best pimm: that is the walmart/amazon

conversation. more. believe stores cost york of a mix of both but i think liz's point is an important point. you to be good online. what is williams-sonoma's percentage online? pimm: there has been an acquisition this week of the ann taylor company. what is your take? liz: i think jake kicked off the segment saying women's apparel is a tough place to be and i think that is true. this transaction is indicative of that. there seems to be a lot of synergy between the companies. under 50 million is the number they are talking about but it adds up to more overtime. ann taylor is in new york city. very expensive employees and office space. there is a lot of back-office synergy between the two.

i think it makes sense for the players to partner together to become stronger in an environment that has become really challenging for women's apparel. pimm: i want to thank you both. liz dunn, j margolis. still ahead, billionaire ry.estor mark las his thoughts on who can be the biggest challenger to hillary clinton. ♪

pimm: welcome back to the bloomberg market day. top stories crossing the terminal right now.

two hours from now the federal reserve for release minutes from last month's policy makers meeting. investors will look for clues about timing for an interest rate increase. mayral reserve officials reiterated that they expect a bounceback. tanks the world's a gift -- of the world's biggest banks will have to pay $5.8 billion in penalties. five of the banks agreed to plead guilty. prosecutors say currency traders used chat to manipulate the banks. a crime wave involving atms. fike oh says criminals are stealing debit card data from atms at the highest level at least 20 years. criminals steal information from credit card so they can make counterfeit ones.

lasrynaire investor marc is betting big on hillary clinton in the 2016 campaign. as a chief executive of avenue capital group, he is previously backed president bill clinton and is now pouring money into his wife's campaign. his thoughts on who may be a reasonable alternative may surprise you. the state of hillary clinton's campaign. she is looking a bit to the left and i think that is fine. people who are giving money to her understand that. some people have some issues. i think a vast majority will not have issues. >> one of the things that happened with president obama running for election was it was harder for him to raise super pack money because there are a lot of rich democrats who do not like giving to super packs.

people talk about hillary clinton raising 200 -- raising $2 billion. i think the democratic super pack will raise a little less than the republican ones. i think it will be less. i do not think the campaign is trying to raise $2 billion. i think it is closer to $1 billion. you will raise money on the super pac. >> you think heller clinton will go into general election being outspent -- you think that hillary clinton will go into the general election being outspent? jay: if they get outspent -- marc: if they get outspent, they will get outspent. i think as people get more excited about it, there will be more money that will be raised.

it depends on who the republican nominee is. right now it is hard to raise a lot of money would you do not know who your running against. >> do you have a sense for about how henton feels about his wife's aspects -- prospects? holy things will be the toughest opponents she will face of the republican side? marc: i think he views her prospects as being good. if he had to choose, he would tell you she is the best candidate. thinka bias view but i that is it. as to who was going to be the best nominee on the republican bush would bejeb very strong. i think governor walker would be very strong. rubio, obviously. i think at the end of the day is either going to be bush or walker or rubio. >> a lot of people in the new

york donor world -- into this and twirl -- in two dozen 12 a lot of people did not look at mitt romney as the m&a. nemy. the e is there a similar feeling about jeb bush? that maybe they would prefer her to him but that he would be all right as president? want you definitely hillary to be the president. i think the vast majority of people that i know support her and think she would be phenomenal. i don't think -- i think jeb bush if he ends up becoming president, i would look at them and think he would be reasonable. i think i would look at it differently with some of the other candidates. pimm: marc lasry, chief executive of avenue capital group speaking with john heilman

and mark halperin. still ahead, looking forward to watching the u.s. open in under a month? it will not be watching it on nbc anymore. the business behind broadcasting golf, next. ♪

pimm: for the past 20 years if you ever watched a u.s. golf open on television it was on cbs . fox sports recently announced a new partnership with the usga so when you watch rory mcilroy tee off in washington state, it will be on fox. eric shanks plated in sprint -- played an instrument though role. rights are so important to any television --

and very expensive. some question, why are these rights -- broadcasting rights so special in the gulf is on the decline nationally. eric said to me that ratings have continued to go up. there was a moment in gulf where people thought, what do we do after tiger woods. there is rory mcilroy and others who have come in his place. the broader question, are these rights going to continue to rise in price? pimm: $1.1 billion for a 12 year deal? betty: along those lines area that is nothing compared to what the nfl gets or what the nba does. he felt that in order to grow a network like his you have to have those rights and those prices are going to go up. here's what he said. eric: 97% of american homes last year watched sports. there is no genre of programming

the gets watched more than sports. those homes want on average 200 hours a year of sports. say,s is -- people always the value of sports rights. i think that you pay what they are worth and they are becoming more valuable every day because it is the one thing that now brings a community together. everything else is time shifted. betty: i kind of think we are lucky in business news. if there are two things you watch tv for live, it is sports and the markets. we may be -- hopefully unscathed by this era of timeshifting where people watch their videos anywhere they want, wherever they want. pimm: you will ask them about rose?se -- about pete gros let's go to julie hyman.

julie: bloomberg television is on the markets. a quick look at the action on the street at this hour. the test -- the past few days we've not seen a lot of movement for stocks. yesterday the dow closed at a record. today we cannot seem to duplicate it. optionsme for today's insight is jeremy woodard. -- jared woodard. it is good to see you as always. as we bump along, i feel like i'm asking the same question every day because we have been seeing almost duplicate actions for the past few days. when you look at the options able to glean anything over what the expectations are? negligence he does go things. -- i think we can see two things . the cost of protection for

nearby outcomes over the next one to two months is fairly low. the costlly speaking of options is not at any kind of extreme level. which means the traders expect fairly normal range of outcomes. the other thing we have seen, this is been true the last six to 12 months. cost of downside protections has been very high. especially given this point in the economic cycle. the cost of 25 elton for protection -- delta put protection is at levels we would associate with the european sovereign debt crisis. julie: i guess that is a function of the bull market we have been in. jared: there are theories. while the popular one is the velcro rule has reduced the ability of banks and other market makers to provide liquidity and leverage their balance sheets.

another argument is that there has been more demand from process hedgers, not just equity funds but people in credit and fixed income using derivatives to gain protection against a possible market move. .ulie: i want to take a tour you're the the fsi -- the f x i. once you -- why don't you lay it out for us? jared: it is a fairly straightforward bearish trade. we are buying $45 strike july puts on fsi. instead of buying them out right, we are selling at 5254 call spread. you could put this trade on for a net credit of about 10 seven -- for about $.10. downsideosure to the if the underlying -- your breathing room if it does not go higher. julie: china is tricky because

the economic fundamentals team to be deteriorating but at the same time you have stimulus that appears to be coming in. how the way that when you're tried to put on a trade? jared: it is an important issue because you do not want to short into the teeth of the kind of trend we see. a couple of things that could be accountable for the near term. a lot of the movement in f x i has been driven by investor .lows and those could reverse he also have new ipos coming on at record levels which are going to lag any change in sentiment. , thank youd woodard for talking to us about china and the u.s. much more bloomberg market day, coming up. ♪

pimm: good afternoon. betty: welcome to the bloomberg market day.

debate billions of dollars in fines -- they have agreed to pay billions of dollars in fines. that hurts consumers. we with highly what is behind this decision. betty: as david letterman prepares for his last late show with a look at how the decision to buy the ed sullivan theater back in the 90's has paid off. pimm: good afternoon nine pimm fox. i'm here with betty liu. betty: equity markets are a little bit lower. two hours before the fed releases minutes from their last meeting. the s&p is down 1/10 of 1%. the dow, off by 22