captioning sponsored by comedy central captioned by media access group at wgbh access.wgbh.org >> jon: that's our show. join us next week at 11:00. here it is, your home of zen. >> so describe to us your work. what do you do down in this lab? >> well, we

captioning sponsored by comedy central ( theme song playing ) ( cheers and applause ) >> stephen: welcome to the report, everybody. thank you for coming. thank you so much. thank you, folks.

stephen, stephen, stephen! stephen, stephen, stephen! stephen, stephen, stephen! (cheers and applause) >> stephen: thank you so much. please, please, folks, have a seat. folks, before we get started, a normally don't waste my time reporting on tinseltown but today there's shock news out of hollywood about one of my heroes, fred willard. (laughter) you know him from films like this is spinal tap, waiting for guffman and best in show, funny, funny guy. well, fred just got arrested at the tiki theatre, an x-rated movie house in los angeles with his pants down and i'm hoping like a tea towel on the seat. now i got two things to say here. first to the l.a. cops, you know i always stand by our boys in blue, but what are you doing?

(laughter) what are you doing? what dow expect to find in the tiki theatre, roger are-- roger ebert reviewing toll booth shut 4? no. it's gentleman who still appreciate seeing movies on the big silver giving each one their own private thumbs up. so either close the place down or leave them alone. secondly, mr. willard, right off the bat, still a huge fan. but there's something you need to know. it's called the internet. okay? (cheers and applause) it's complicated. ask your grandchildren. but don't tell them why. okay? say i had to pee wee. okay. now with the top story out of the way-- (laughter) i now need to address the growing crisis of confidence

in our nation's banking system. whoa. crisis of confidence in our banking system, deja vu. is this 2008? no, it's thursday. (laughter) okay. all right. (cheers and applause) you see back during the mortgage crisis, people were really not trusting the bankers. i'll admit even i got swept up in it. but now i know that that storm in the castle was the old pitchfork was uncalled for because my finance buddies at the country club tell me the banks were the real victims. and those guys can be pretty convincing in the steam room. now it turns out the whole thing wasn't that bad. confidence was eventually restored, the banks rebounded. and i'm sure they'll also

rebound from whatever this new thing is, jim. >> the libor scandal is spreading like wildfire. >> fun lick outrage is growing over allegations that for years banks all over the world manipulated what is called libor. >> the libor scan call. >> libor. >> now it's pronounced igor. (laughter) >> stephen: well, however it's pronounced, here's what we know. the british megabank barclays made some mad dollah dollahs illegally manipulating the so-called libor which stand force the london interbank offered rate, not to be confused with the european interbank offered rate or euribor. euribor of course also what you say to anybody talking about libor. now here's how libor works. every morning each of the big london banks has to tell the british banking association the lowest interest rate at which it

thinks another bank would lend it money. now how does each bank determine their own rate? it's a complicate product ses that is of vos a multitude of factors like investor confidence, the money supply, the human anus and yanking things out of it. (laughter) but mostly just those last two. then-- (cheers and applause) round of a plaus for the human anus. then, then that libor rate is used to set interest rates everywhere on earth. well, of course not everywhere. just places that use money. i believe emperor penguins on the roth ice shelf are not affected. now here's the wrinkle. the banks that determine libor also employ traders who make bets on what that rate will be.

they're not supposed to talk to each other but you'll never guess what happened. >> traders at banks like barclays were essentially conspiring to fudge the data to boost their own trading profit. so one part of barclays would say to another part of barclays you can please submit data that makes us-- that either is high hooer or lower than it really is in order to boost our profits. >> stephen: now personally i don't see anything wrong with some work buddies doing each other a solid. you know the old saying, you scratch my back, i make the global financial system your bitch. it's all detailed it in e-mails between barclays traders and rate setters like please go for 5.36 libor again. very important that the setting comes as high as possible. thanks. and dude, i owe you big time. come over one day after work and i am opening a bottle of bollinger. now i know what you are thinking. it was unethical for the

trader to offer the rate setter a gift of champagne, but no hookers. (laughter) now admittedly barclays fudged a couple of things to pump their profits. but what's the point. it was just barclays in the u.k., right? >> here's the point it wasn't just barclays in the u.k.. >> stephen: all right, angry cluster of teeth. (laughter) so if it wasn't just barclays in the u.k., who else? >> the regulators are also looking at more than a dozen other banks and those include citigroup. >> stephen: what? so, so citigroup is an american bank. no big deal. >> it's a big deal. [bleep]. >> you can't trust libor. you can't trust anything in banking. >> i knew i shouldn't have trusted those guys! i am never, ever-- (applause)

>> stephen: i tell you! i am never getting drunk in the steam room again. i mean the consumers have been screwed. >> since consumer loans are based upon that rate, you could argue that this actually helped consumers by getting them lower rates. >> stephen: oh. oh, so it was good. >> the banks deprived investors of hundreds of millions if to the billions of dollars by keeping libor rates low. >> stephen: so it was bad. >> any time there is a winner in a trade, there's also a lowers it is basically a 0 sum game. >> stephen: so it is both good and bad at the same time like the bachelorette. (laughter) god, i'm so confused. i know this libor thing is important but for the life of me, i cannot figure out why. >> here to figure out why for me life is columnist and "new york times" washington bureau chief dave leonhardt.

dave, thanks so much for coming. (applause) do su have one of these. >> no, i'm good. >> stephen: all right, now dave, you know me, you've been on the show many times. you know i see the world in simple terms. things are either good or they're bad, okay. cupcakes good, terrorists bad. what are we talking about with libor s this cupcakes or terrorists. >> closer to terrorists, it's bad. >> stephen: okay. >> it's bad because, although as your talking heads noted there are some winners and some losers. basically what is happening if these allegations are correct, which they certainly seem to be. >> stephen: it's written down. >> they've agreed to it in some case. basically what they are doing is the banks are acting as both referee and player. >> stephen: isn't there an honor system out there someplace? don't at some point someone says, you know, we would prefer if you not lie and manipulate the global currency system. >> there is supposed to be, right, they are basically police. they are banking regulator whose are supposed to come in and make the banks fear cheating in this way. but we seem to have gone

through a number of years in which not only did cheating become acceptable in a lot of parts of the financial system, but the regulators, the police weren't looking very closely. >> stephen: is this a lot of banks or like one bank. >> we don't know yet. it looks like-- . >> stephen: should we not find out. maybe we shouldn't find out. because if a tree manipulates the global currency system in the woods and nobody knows, do we lose trust in our banks. >> we do. and that's why we should find out. i mean-- . >> stephen: so we have to trust our bank, right. the credit crunch of 2008 was that bank wouldn't trust each other. >> some people think banks understood this libor cheating was gong become then and that exacerbated the 2008 crisis. >> stephen: if the banks lose trust in each other about what is the reality of interest rates they should be paying could that lead to another banking crisis. >> it may have exacerbated the last one. >> stephen: okay what if we clap our hands, can we keep the banking system alive. >> the best way to restore trust in the banking system-- . >> stephen: like with a

retreat and trust fall or something like that, maybe over a cliff. >> is to make people feel like the banking system has-- and so it's to figure out-- do not say regulations. >> can i quotron ald reagan. >> stephen: you can quotron alt reagan. >> it's figuring out what actually happened last time and then it's also making sure that going forward if on some off chance there are future bankers who cheat, they don't get away with it for years and years. >> stephen: is this illegal? >> some of this is clearly illegal sses so is this going to be like 2008 when the sheriffs went and arrested all those guys in wall street and put them in jail. >> there are allots of bankers in jail. some people think this could lead to more bankers going to jail than the last crisis did. my attitude is a little bit i'll believe bankers going to jail when i see bankers going to jail.

>> stephen: does this affect me because i feel like in some ways this is just like parents having an argument with each other and we kids can't figure out whether if affects our lives yet. it's just money going through a hoop through pipes like water rushing through like a turbine. does the economy, my personal economy connected to that in any way? >> yes t is, if you have a mortgage t if you take out a loan to buy a car. if you interact with the financial system in any way, what you see here is that its financial system in some ways has been rigged so that the people who are in it are both referee and player. >> stephen: but listen. >> they are skimming a little bit off the top from you and everybody else. >> stephen: is that necessarily a bad thing. professional wrestling is rigged and people love that. why can't we just make sure america wins every week if we wear the white hat. >> if you are a rigor, a rigged system is a great thing. if you are not one of the people rigging the financial system, it's probably not so good for you. >> stephen: how i do get into that whole rigging business? >> thank you, dave. >> stephen: dave leonhardt.

we'll be right back.

>> welcome back, everybody. thanks so much. nation, you know, no matter how low our economy has sunk, america has always been able to console itself with one simple truth, at least we're not canada. with their pelt-based economy, canada has always been the plain sister who makes us feel sexy. that's why i was crushed to learn this. >> our neighbors to the north, get ready for this,

because we're coming down a notch in this country, our canadian friends are now richer than we are. >> new analysis shows for the first time canadians have a higher average net worth than americans. >> canadians are worth more than americans! for pete's sakes. they've got ducks on their money. (laughter) apparently the net worth of the average canadian household in 200-- 2011 was $363,202 dollars while the average american household net worth was $319,907. that is the difference of-- i don't know because americans can't do math. (laughter) and the canadians don't even know how to gloat about it. canadian columnist doug haddow said quote ef reling in america's fall from the top is ultimately uncanadian.

especially when you begin to suspect that we're not actually winning, we're just losing more slowly. ha. suck it, slowpokes. we're winning at losing. (cheers and applause) >> stephen: you know what, you know what, here's their money. here's their money. we don't need your pitty. you may have more of your fancy sea through polly mer play money now but it's to the going to last. >> while the canadian economy is doing pretty well, it's new 50 and $100 bills appear to be melting. the new bills are made from a polymer that was supposed to be indestructable. turns out the bills can melt if left in cars on a hot summer day. (laughter) >> stephen: leave it to the canucks to turn a currency that works only in ice rinks. canada, have you learned nothing from the story of hanukkah when the maccabees fended off their greek oppressers only to have the

desert heat destroy their treasury of chocolate coins? this just proves-- this just proves what i have always suspected, canada. celsius does not work. your water boils at 100 degrees. ours can get all the way up to 212. that's why our money is tougher. in the meantime, you enjoy that global warming, eh? we'll be right back

>> stephen: welcome back, everybody, thanks so. my guest tonight is the head of the environmental protection agency. don't tell her i-- the show with a tire fire. please welcome lisa jackson. cheers plaus thank you so much, miss jackson. okay. ma'am, are you the current administrator of the epa,

environmental protection agency, i'll bite. environment. why do we need it? well, we already have it. the environment is the air that you breathe. >> yeah. >> the water that you drink. >> uh-huh, i don't drink a lot of water. i drink mostly bollinger. >> the land where you live, where your kid goes to school, maybe where you play. >> yeah. >> so if it's dirty f it's unhealthy f the air is full of pollution you can't be healthy. >> stephen: i mean, but i've got my own kind of environment because my audi s5 has climate control. i get in there, closed the windowsnd i can control my climate, heated seats, the whole nine yards why do we collectively have to worry about all of our environment it thaunds like we're all sharing the planet. that sounds socialist. (laughter) >> well, we are. we are sharing the plan et cetera. at some point you're going to get out of your car and the air you breathe is going

to be the same as the folks are wherever you going and the water you drink. the environmental protection agency is actually all about health. if those thinks aren't clean, we can't have a healthy and safe community. >> stephen: i get most of my information about the epa there fox news. so obviously my question to you, madame, is why do you hate jobs? you actually get paid on commission for every american job you destroy with your regulations? because you know you're killing jobs, right. >> no, stephen, we are not killing jobs. we are protect the air and the water. >> stephen: wait a second, have you heard of like tornadoes, heuer canes and droughts. i think that the air and water is attacking us. it's defense right now. we're playing big d with the environment right now. >> well, natural problems can be sort of a bear to deal with. but you know, epa has been around for 41 years. we were started by richard

nixon. >> stephen: that is hincko. >> because he understood that it was time for us to deal with rivers that were on fire w air that was so smoggy. >> stephen: we had rivers that burned 40 years ago. that's alternative energy. we could have powered cleveland could have been powered by the cuyahoga river. but was it-- was it really necessary, things were always better in the past i thought. >> no, no, no. actually we don't always remember some of the things that we dealt with. we used to have lead in gasolinement when you drove your car your audi you could be putting lead all over the countryside and we know lead is to the good for you. we used to have alar on apples. we used to have noon at pittsburgh you could look straight at the sun if you could find it. it was sort of like what we talked about in beijing today. >> stephen: a natural sunscreen. >> it's been 41 years of saying listen, we can grow our economy. of course we want jobs. but we also want to do it to ensure that our kids are

going to be healthy, that our families are able to thrive. that our communities and the places we love to look at and enjoy are going to be there for the future. >> stephen: but we did it. we cleaned things up. things are way cleaner than we used to be. why do we need the epa any more. you did it it's like unions an child labor laws. we don't need those things any more because they figured their problems. now they can go. >> one of the things we worry a lot about is back sliding. and we aren't done. it was not until this past year that we finally set a national standard in this country to deal with mercury. >> stephen: what's wrong with mercury. i break up the thermometers and paint my face like a tin manment it was fun. and i would play with my pet ingut leady. what is mercury do. >> we are going to ask you not to do that any more. >> i don't, leadie went to a farm upstate. why should i worry about mercury. >> mercury is a neurotoxin it is toxic to the brain.

and the place we see it, it's manifestations is in children. mercury can affect a child before he or she is born and we can measure the affects of mercury pollution by a loss in iq points it stays around a long time. it's like lead and so that's why there are places where we can't fish because mercury is coming up the food chain and could affect our bodies. >> stephen: now dow feel like you got the full support of the administration because the president went with the republicans on smog standards. are you going to vote for romney this time. >> the president said that we needed to wait and get the latest science on smog standards. which we expect early next year. >> stephen: okay. when romney's president. (laughter) thank you so much for joining me. epa administrator lisa jackson.