pweingarten, aft dorg.org. we will be right back.

>> eliot: coming up, restoring power to the people. bernie saunders shows us how it can be done. plus if you thought mitt romney's $10,000 bet was outrageous, wait until you see

>> eliot: last month i had the opportunity to speak with senator bernie sanders. not only did we discuss the citizen's united decision where senator sanders is working so hard to overturn, we discussed an event that took place earlier that week where citigroup shareholders rejected the pay package for ceo. truly a great moment for all shareholders, if only a symbolic one. here is my conversation with the senator. >> eliot: senator, thank you for your time. >> good to be with you, eliot. >> eliot: i know you're focused and rightly so on citizen's united, efforts to repeal it. you had a big event today. tell us about it. >> well, we brought together groups all over the country to bring together a strong grassroots movement that says clearly the citizen's united decision which allows corporations to spend unlimited sums of money on political

campaigns is not what america is about, that we are seeing a situation where big money are just grabbing hold of the entire political process, and that we got to stop that. we need short-term fixes that we're working on here in congress, but long-term, there is no question. this citizen's united decision will go down in lift as one of the worst supreme court decisions ever, and it has got to be overturned. i've got a constitutional amendment in, others do. we have to develop the grassroots efforts to pass that, and to overturn citizen's united. >> eliot: no question that the money flow into politics has gotten only worse and it's a cancer in our system. citizen's united has opened the flood gate in a way that is horrific. let's heavy that we can put --let's hope that we can put a dam-- >> what people don't appreciate, what citizen's united means, when members of the senate and

house go to vote on an issue they're going to be thinking want to stand up to wall street or the coal companies or the oil companies. because when they go home on the weekend there could be a flood of 30-second tv ads without disclosure. it's a huge issue and it has to be dealt with. >> eliot: talk about reform efforts and one that passed and seems to be working, the vote that came in that says to citibank you're paying your ceo too much, something that dodd frank put in place. dodd frank seems to be working a little bit. >> in this instance it does. eliot, what this is about, everybody knows that the middle class is shrinking, property is increasing, and the people on top are doing phenomly well. and their effective tax rates have gone down which is one of the reasons why we have a deficit crisis . but what people are saying look, especially on wall street, when these are the guys, dishonesty, their illegal

behavior, their recklessness caused this recession that has caused so many their jobs, their homes, their life savings, and now for these same people to be rewarded with obscene salaries is unfair. i think you're beginning to hear a shot that will increasingly be heard around the world, that these guys cannot get outrageous salaries. >> eliot: we both think that dodd frank should have been stronger, and on paper giving shareholders the opportunity to say you're giving away our money and you're paid too much. mitt romney who is now going to be the republican nominee said that dodd frank was an encroachment on our freedom. i don't even understand where he's coming from on this. how can giving shareholders more power be an encroachment on freedom. >> what is extraordinary. i presume that he thinks that regulation is terrible. we've got to get the government off of the backs of our wonderful friends on wall street, who are so trustworthy

and so honest that they really don't need any regulation, it is literally beyond comprehension how you can talk about more deregulation of wall street when it was deregulation itself and the allowing of these huge financial institutions to merge with insurance companies and commercial banks with investor banks and doing away with glass-steagall. and then to say that what we really need is more deregulation after the experience that the american people had is quite unbelievable to me. >> eliot: i'm firmly convinced that mitt romney lived through a different history over the last five years than the rest of us did. he clearly did not see the crisis that has been caused in our society because of as you point out of deregulatory, and it was a disaster. but here giving shareholders power, the folks who own the company. i thought he would appreciate that virtue. >> look, it's their money. >> eliot: exactly. >> the idea that people investing in a company cannot

have any say about how their money is being spent in terms of ceo salaries is obviously incomprehensible . of course they are. they own the company. >> eliot: the question remains what will citibank board of directors do with this? it was not mandatory. it was saying, it's like a kid at the family table. we'll tell what you we think but daddy or mommy will make the decision. what will the board of directors do? >> i expect it will be an interesting debate. and it would be to be really quite extraordinary if they say we're going to go forward any how how despite what the people want any how. we'll spit in their face and give them their wishes. >> eliot: yeah, to vote against it and then they do it anyway, they're in a dicey position. it would be fun to see the battle of the litigation but

they better recognize that shareholders said loud and clear this is what counts. can shareholders stand up as >> of course they can. we would like shareholders to be speaking out on the nature of investments being made by wall street, the need to start investing in the real economy rather than the casino economy. there is a whole lot. you know, people's capitalism, so to speak, suggest that people who invest in a company should have a say about where that company goes. they don't like the salary the ceo is getting, they should be able to say that. if they don't the direction the company is going, they should be able to deal with that . >> eliot: senator bernie sanders from vermont telling us how it is. thank you. >> thank you. >> eliot: jp morgan chase loses $2 billion on a single trade. it would appear something is

innovation matters now more than ever.

>> eliot: citigroup shareholders took a stand against ex-sore by tonight scenetation. plus jp morgan made a big bet and loss. it's go time. >>every weeknight cenk uygur calls out the mainstream media. >>the guys in the middle class the guys in the lower end got screwed again. >>i think you know which one we're talking about. the overwhelming majority of the country says"tax the rich, don't go to war." >>just wanted to clarify that. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

[ male announcer ] the jeep grand cherokee has won more than just respect. ♪ ♪ as a culinary manager i make sure our guests have an over the top experience. being hands on is key! i make sure every plate looks just right. [ male announcer ] don't miss red lobster's four course seafood feast, just $14.99. start with soup, salad and unlimited cheddar bay biscuits followed by your choice of one of 7 entrees. like new coconut and pineapple shrimp

or shrimp and scallops alfredo. then finish with something sweet. all four courses just $14.99. [ reza ] it's so much food for such a good value. i'm reza, culinary manager. and i sea food differently. what makes hershey's s'mores special? pure chocolate goodness that brings people together. hershey's makes it a s'more... you make it special. pure hershey's. very, very excited about that and very proud of that. >>beltway politics from inside the loop. >>we tackle the big issues here in our nation's capital, around the country and around the globe. >>dc columnist and four time emmy winner bill press opens

current's morning news block. >>we'll do our best to carry the flag from 6 to 9 every morning. >>liberal and proud of it. >> eliot: it was just two weeks ago that jp morgan ceo jamie dimon suffered a loss of $2 billion on a riskry strayed. while if you tried to cast it off as a minuscule drop in the bucket with 2 trillion-dollar of assets under management, it was clear that there were largeer systemic issues in need of examination. i sat down with two experts who aren't afraid to call it like they see it, and like it really is. i'm joins by blogger fill philip and matt. all right, phil, let me start with you.

what should we do with jamie din dimon. should he pay some penance. >> he certainly should not be chairman of the board. the board exists to provide oversight of the ceo, and that is not happening. domestic bank boards are pretty toothless, but putting the same person in two positions is ridiculous. it's insane that he holds this. he's on the board of the new york feds. >> eliot: i was screaming about that last night. you should have listened to it. the fbi now looking at this. matt, what do you think? is the fbi going to make a criminal case or they're put out a press release. this seems like the least likely to be criminal but the most likely to be bad judgment. >> it's questionable what kind of criminal case they could make, an accounting issue or disclosing on time to

shareholders, but it's terrible judgment, however you want to look at it, whether it's a criminal case or not it was an awful, terrible thing that happened. >> eliot: to be an argument for fundamental restruck restructuring of the financial system needs to be argued once more. small footnote, your nemesis head of target emblazoned on his back and now he's going to call up jamie dimon and say it's your churn. >> chase had the quote/unquote term of being good bank while goldman was faking from people like me. >> eliot: is there snore squid that can wrap itself around it. >> goldman sachs with all of his squid-like tendencies has its own corner of the world. jp morgan chase takes in

deposit from all the mom and pops and big businesses in the world, anyone who has more than $250,000 on deposit, they want to bank with jp morgan chase because they're too big to fail and it's government-backed, and they get all these deposits in. they're an utility bank and it is their job and duty in return for this explicit back stop to take those deposits and lend them out to the economy. what do they do instead? >> eliot: tell us, finish the answer. >> they take the $360 billion and put it in a hedge fund in london. >> eliot: let me put this in english for people who are not steep in financial language like you are. jp morgan is doing what we don't want them to do. taking the federal guarantee gambling in a casino, and making us bail them out. that's why we went to the volcker rule, and jamie dimon is doning against it. >> he's very happy at the money

that this london hedge fund makes. and they think eventually there is going to be a huge blow up and you'll lose $2 billion in one day. >> eliot: you're right, the president was calling morgan chase the good bank and jamie dimon was getting all the accolades, and they're using the federal guarantee, get money cheap and take it and play it at the casino. >> this is what the glass-steagall is for. for, so we don't have the risky behavior mixed with the federally insured behavior. chase is infinitely more dangerous than goldman sachs which is just an investment bank. they're not really a bank. this is really a bank. this is really dangerous and something that the public has to worry about. >> eliot: and the thing that is troubling to me is that the

president went on "the view" yesterday. it was aired today, speaking in glowing terms about jamie dimon's management style. then you have romney's advisers saying this should be kept--this isn't even a government issue, which is worse? the president praising jamie dimon or romney saying this is not a matter for government intervention. >> we know what this is about. this is an election year and both of these candidates want to make nice with wall street and companies like this because they want the campaign contributions. it's transparent. >> eliot: but don't people see the political upside of the populist? we're seeing carnage-- >> it does not get you big campaign contributions. look how much money-- >> eliot: i wish you would have told me this when i was in office. >> but obama is down enormously from four years ago from what he was getting from wall street. he needs to be able to put some kind of line underneath that. >> eliot: i want to come back to

something you were saying a few moments ago. they have turned morgan chase into a hedge fund, a piece of it. you wrote a blog, a large piece of the profit that jp morgan chase has gotten-- >> 25% of jp morgan's profits came from this london hedge fund, which had $360 billion in assets under management which makes it one of the biggest if not the biggest hedge fund in the world. and no one knows it exists really. >> eliot: what does that do in your mind to the credibility of the claim that was being made by jamie dimon that these were just hedging positions. laughable? >> hedging like all hedge funds are hedging. you can always come up with some position in the bank where you're quote/unquote hedging but the great genius of the woman in charge of this is every time jamie dimon picked up the phone and told her to put it on

the hedge, she would turn it into another $90 billion of profit. they were both hedging and making billions at the same time. >> eliot: these are not just hedges, she was being paid $14 million a year. you don't pay someone $14 million for just being a risk manager. you have to be a profit maker for that type of compensation. >> this underscores the weakness of what the volcker rule was going to be. under the existing volcker rule if it were to be implemented this activity would have been they would have claimed that this was a hedge and that active would have been exempted. it tells you how ridiculous the controller rule-- >> eliot: the banks have lobbied so extensively. >> right. >> eliot: the announcement of depository functions was clear. >> although, there is a silver lining here which is the volcker rule has not actually been

nailed down exactly yet. the sec still has room to look at what happened here and to say, you know what, we have to crackdown on the bank's ability to do these kinds of trade. >> eliot: let me take their side to flesh this out. this is only $2 billion. we can absorb it. we have a big enough balance sheet, why is everybody so upset? how do you respond about that? >> it's risk management, it's not about $2 billion. it's about saying that if jp morgan, who who is the meant to be the best risk management house in the business, and jamie dimon is completely hand on at the bank can suddenly wake up one morning and find himself $2 billion in the red, that means that no bank has the ability to do these kinds of things in a risk-freeway. >> this is very similar to what we saw happen with aig. aig had another small london london-based unit that was making enormous sums of money

but the parent company did not know it had this tremendous liability that ended up destroys destroying not just the company but the country. >> eliot: is it like saying, just because i survived the heart attack doesn't mean that i should be concerned about what caused. the fact that they could be hit by a $2 billion, if there were shopping markets and other banks had the same thing happen at the same time, boom, we could have a cat lymph of '08. this is the canary in the coal mine saying, guys, nothing has fundamentally changed in terms of the way business is being run. >> and we've seen all the top trading and all the things made illegal by volcker is being moved to london and redefined. >> eliot: is there some model, a bank or some regulatory

framework you would point to and say that's what with we should do. >> in-inin the u.s. it's all about rules. you have to tick off every single box, and if the lawyer signs off on it, it's okay. the u.k. blew up as well. it's not like we got this right, but in principle we have a slightly better idea. we say, we have a big hand waiving thing. you should not be making big bets if your back-stopped by the government. when you regulate and see this going on in london, they can say, mm-hmm, you're not allowed to do that, and they don't have to point to a specific rule. >> they have discretion. >> yes. >> eliot: i don't know if anybody here wants to give regulators discretion. [chuckling] we introduced you as the scourge of wall street. is there someone that you look to that does it? you can say they have the adjustment, they have the balance, anybody?

no? >> the canadians? >> i don't know, if they come in my purview, they've done something wrong. i don't know who that person or that organization would be. >> eliot: is there anyone who would be the next good banker? jamie dimon was it. that's what was so disheartening, you would like to think there is someone there that you can look at and say this is good. >> when chase was being held as this quote/unquote good bank they had destroyed counties and had been involved in scandals which they paid $100 million fine. they just had not this gigantic public scandal but they've been caught in doing all kinds of things. >> you can't have $360 billion in excess deposits, deposits which have been given to you by people to lend out into the economy and then refuse to lend those out and send them off to london and call yourself a good banker. >> eliot: in a way that might be the most important point, if we come back to what matters in getting our economy going. you're saying they've taken this

huge pipeline of deposits, which is instead of doing what we want banks and need banks to do which is to lend it out, they put it in a casino. >> they're not just taking the deposits but the cheap, almost free money that they're getting in the federal reserve as commercial banking institutions, and taking that money and using it to operate the hedge fund. >> eliot: that is why there is this pre-verse transfer of assets. now you're giving that money to the banks. >> well, if you look at the percentages, if you're making $5 billion on $630 million of deposits that means jp morgan's cost of profits is 2.5%. we would all love 2.5% on our checking account. >> eliot: that's the case. philip and matt, great to have you both on the show tonight. >> eliot: iconic legislature and

champion congressman barney >>(narrator) gavin newsom, lieutenant governor of california, and former mayor of san francisco is on current tv. >>every night on cable news networks everyone's focusing on what's wrong. i want this show to move past that. i love creative people, and with all the vexing problems we have we need creative thinking. >>(narrator) with interviews with notables from silicon valley, hollywood, and beyond. >>at the end of the day this show's simple. it's about ideas. ideas are the best politics. ideas can bring us together. >>(narrator) the gavin newsom show. friday at 11 eastern/8 pacific. only on current tv. [ female announcer ] e-trade was founded on the simple belief that bringing you better technology helps make you a better investor. with our revolutionary new e-trade 360 dashboard you see exactly where your money

is and what it's doing live. our e-trade pro platform offers powerful functionality that's still so usable you'll actually use it. and our mobile apps are the ultimate in wherever whenever investing. no matter what kind of investor you are, you'll find the technology to help you become a better one at e-trade. and who doesn't want 50% more cash? ugh, the baby. huh! and then the baby bear said "i want 50% more cash in my bed!"

phhht! 50% more cash is good ri... what's that. ♪ ♪ you can spell. [ male announcer ] the capital one cash rewards card. the card for people who want 50% more cash. what's in your wallet? ha ha. ♪ ♪ so, you guys grew up together. yes, since third grade... what are you lookin' at? not looking at i anything... we're not good enough for you. must be supermodels? what do you model gloves? brad, eat a snickers. why? 'cause you get a little angry when you're hungry. better? [ male announcer ] you're not you when you're hungry™. better. [ male announcer ] snickers satisfies. right? [ laughter ] >> 46 minutes after the hour, right back on the "stephanie miller show."

>> eliot: coming up, my in-depth conversation with congressman barney frank on the past present and future of financial reform. plus shareholders taking charge of the companies they own. >> eliot: here's my view. two big wins this week. first, bowing to grassroots pressure, they said they will no longer lobby for "stand your ground" and voter i.d. laws. second, shareholders at citibank stood up and said, enough. we don't want to pay our ceo $15 million. these events highlight a major opportunity, a new approach to moving the political needle to changing our politics. so i'm going to suggest a new slogan. instead of occupy wall street, let's change it a bit to we own

wall street. and we do. our dollars own and could control the companies that we want to influence. with ownership comes the right and, indeed, the obligation to get the company's we own to do the right thing. what do i mean we own them? the shares that actually control the major banks, manufacturers retail giants, all the big publicly traded companies are held by the big pools of capital, mutual funds, public and private pension funds, endowments to big universities including the public ones. we own those pools of capital. it's our money. your 401k money, your pension being managed by the pension managers. public money managed at an endowment. those shares are owned by us. we should control board selection, control compensation and control decisions about political contributions. how to do this? it's pretty easy.

look at the citibank vote. all we need is a few courageous state or city controllers to start using their control of shares to vote the right way. here's the first easy step we should take as shareholders. ask and then demand the companies stop making contributions to any organization that is trying to change the rules in washington. we don't care if it's the chamber of commerce or the sierra club. we want corporate money out of the game of changing the rules. we want the companies to focus on playing by the rules. i longed believe that ownership trumps regulation as a way for change. let's not stop excesses. let's use our ownership i have the most common type of atrial fibrillation, or afib. it's not caused by a heart valve problem.

i was taking warfarin, but my doctor put me on pradaxa instead to reduce my risk of stroke. in a clinical trial, pradaxa® (dabigatran etexilate mesylate) reduced stroke risk 35% better than warfarin. and unlike warfarin, with pradaxa, there's no need for regular blood tests. that's really important to me. pradaxa can cause serious, sometimes fatal, bleeding. don't take pradaxa if you have abnormal bleeding and seek immediate medical care for unexpected signs of bleeding, like unusual bruising. pradaxa may increase your bleeding risk if you're 75 or older, have a bleeding condition like stomach ulcers, or take aspirin, nsaids, or blood thinners, or if you have kidney problems especially if you take certain medicines. tell your doctor about all medicines you take any planned medical or dental procedures and don't stop taking pradaxa without your doctor's approval as stopping may increase your stroke risk. other side effects include indigestion, stomach pain, upset, or burning. pradaxa is progress. having afib not caused by a heart valve problem increases your risk of stroke. ask your doctor if you can reduce your risk with pradaxa.

our conversation is with you the viewer because we're independent. >>here's how you can connect with "viewpoint with eliot spitzer." >>questions, of course, need to be answered. >>we will not settle for the easy answers. the new slogan should be "we own wall street." that's my view.

♪ >> eliot: from equal rights to financial regulation over an impressive 30-plus year career barney frank has been a lion of the progressive movement. even though he decided to retire retire, i spoke with the congressman last month. we discussed the current state of our financial system and if there is any hope for financial reform in the future. let me start with the news of the moment, which is the republican effort to repeal a critical provision of the dodd frank bill what is called the orderly liquidation authority. why are they doing this, and how significant of a blow would that be to the entirety of dodd frank. >> that would an incredibly serious blow. a requirement that people who secure loans retain some of the risk.

one thing, i would say the single most important. loans people made and then didn't care if they were paid back were a terrible problem. then the regulation derivatives, but what this would do incredibly to me is put us back where we were in september of 2008. the provision was strongly strongly advocated by the bush administration. the head of the fdic, and head of treasury and person benber any can i, what the bush administration said, the large constitution going out of business, they had according to the law two choices. they could pay all of the debilities and keep the organization in business or pay none of the debts and let it collapse. so they let the lehman brothers collapse and people would remember that froze up the economy everywhere. when aig got in trouble they decided to

to pay off all the debts. bernanke said this is crazy. if a large financial institution today cannot pay its debt, and we have to do a lot to keep that from happening, but if it can't pay its debts, it should go out of business. share share was right about one thing, it should, but it should not be in the health bill. the boards of directors should be fire, and secondly we give discretion to the administration saying you know what, if none of these debts were paid that would cost such contagion, we would pay only as much of the debt we need to prevent there being a collapse. third and most important anything we pay out should be recovered from large financial institutions so it does not cost the taxpayers.

republicans said, you know, what we don't think--this is what it came down to--that the healthy financial institutions who didn't fail should help to pay the ones that do. they said let's repeal the whole thing, and senator bacchus was very eloquent of how they would be too burdened and subject to this tax and that tax and the four banks who came back to profitability they didn't want them to be on the hook for this. they want to return to the situation we were in september it's incredible to me. it's a sign of the motion towards irresponsibility of the republican party. it was the republican administration who said we are not happy about this. with with want to keep this from occurring. an institution goes under, pays none of

its debts and cause the chaos that it caused. they want to go back to that. >> i do not accept the claim that there were not sufficient tools in the early stages of the debacle leading up to '07 and '08, but your fundamental point is important. the republicans are trying to take away the tools that the government needs to confront the issue going forward. >> by the way, let me say this. you're right. earlier on ben ben bernanke inherited from us the ability to stop bad loans. there were tools, what i'm talking about is only at the moment when the crash came which i think we agree on. >> eliot: absolutely. is this in fact similarric of what is going on with the republican agenda that is, in fact, almost a paradigm of what the republicans have been parroting for many years. they want to cut taxes again save money for the defense department, deregulate financial

services. this is deja vu all over again and what mystifies me is that the public accepts it and buys into it. >> it's even worse, the total none relation or the deregulation that got us into trouble, they're very explicit about this, you don't have to take my word or yours, eliot the wall street journal praised paul ryan because his plan puts money back in, and takes money from medicare and medicaid. the wall street journal praised paul ryan for protecting the military, giving more money to spend in afghanistan and less money for medicare and medicaid. but i am struck, i've talked to people at the large financial institutions. one of the things happening right now is that there has been some effort on the part of our administration to keep europe from collapsing financially. an europe piano collapse is the

biggest single obstacle of our economy going forward. we have not done the austerity which the europeans are rebelling against. incredibly i talk to all the financial people. they understand having the federal reserve, having the monitory themonetary fund available, tells the federal reserve not to do a thing. and then they back out. mindlessness has taken over. not only are they for deregulation but against any constructture activity that would deal with the crisis once it comes. >> eliot: there is an a-historical nature to the lessons that has been learned that is terrifying in terms of policy import. >> let's remember, you're a good harvard graduate. remember what they said after napoleon was overthrowned and

king louie xviii came in, the blue bloods did not learn anything and its republicans didn't learn anything to forget. >> eliot: maybe you're more cynical that i'm, but maybe they forget because it's not in-- >> i i won't fight that. >> eliot: you have 31 years of constitutional knowledge and enormous understanding of government. the public rejects the notion of governance. is it possible for those who have a progressive agenda to operate where the public is so cynical about the very notion of governance? >> i have to say, not surprising you asked the right question in a very profound and thoughtful way. ironically it is a problem. we blame the democrats for their mistakes. problem president obama inherited the

worst economy in 80 years. the progress has been slower than anybody wanted, and we're blamed for it. we're in a vicious cycle, and it's exactly as you said. people are angry with the government. and then they don't provide the resources that we need to improve quality of life. because government is not doing things to improve the quality of life, people get angry. and we got to break out of that cycle. that's why i see one way out of this. we need to bring about substantial reductions in america's military spending. the hundreds of billions we are spending as if the cold war is still up and we're ready to fight the soviet union and we're fighting and protecting against communism. we're engaged in afghanistan talking beyond our original goal of putting an end of bin laden. we need to put in a breakthrough. people are angry at government. the angry area they are with government the less government can do things. the less government is able to do the right things, the more

roads are in trouble and more people are in trouble. the angrier they get. >> eliot: is there an opportunity that maybe this november/december after the elections when so many of the issues converge, the tax cuts expire, and is there an opportunity then to make that argument and begin to implement a different vision assuming that the president is re-elected and we've held our own in congress? >> yes, once again you put it right. here's the deal, i've been fighting and saying we're otherdoing the military spending, and subsidizing, but now the wall street journal and that editorial is very important. either we make substantial cuts in the military or we make even deeper cuts in medicare and medicaid or equally deep cuts. i think now what i now see the public is beginning to understand that. i think the staying on in afghanistan longer, building up more nuclear weapons when we already have more than anybody

could need, the public understands that. we have a chance after the elections to say we're going to make--there are going to be constraints on domestic spending, no question, and we're going to make severe cuts to the military and some of the right wingers who don't want to see any cuts in the military are going to go for taxes. if the democrats were to hold the senate, president obama is re-elected, and we make gains in the house, which i think is going to happen, and maybe enough gains to take over, we can get the momentum on this raise taxes on wealthy people, reduce military spending, and constrain spending elsewhere and get back on the right road. >> eliot: congressman barney frank, one the great voices in the house of representatives for 31 years, thank you for tonight. >> you're welcome. >> eliot: stay here for "the war room" with jennifer granholm. thanks for spending part of your memorial day with us.