chase bonuses in the wake of their $2 billion loss. plus a provocative new book argues that religious decline is hurting americans. the show starts right now. good afternoon. i'm matt miller in for dylan ratigan. he and i have switched coasts for the day. he's on assignment in california working with veterans and start-ups to put them back to work, and i'm coming to you live from new york, but you see, i'm actually from california. which brings us to the big story today, and it's fiscal. out west governor jerry brown is proposing harsh cuts to close the exploding $15 billion deficit. cuts to school, health care, welfare, the disabled and child care. >> the biggest source of our

spending without question is to schools. so when we have to have a massive cut, the sls that mass si cive cut and that't will happen if we don't get this in control. >> he's also proposing a tax hike and a tax hike for those who make more than $250,000 a year. he's even trying to slash a day off the government work week. and helping those struggling homeowners from the bank settlements? $292 million are being pickpocketed in red ink. take years of contradictory demands from voters, toss in a crazy process that requires super majorities to get any deal with even a penny of new taxes, then add a ballot measure industrial complex. we used to be the world's beacon on schools, gleaming freeways and more. the scary part is that california may be a glimpse of

america's future. these years of living beyond our means now have washington and the state capitals in shambles. it's already being felt across europe. in greece, liberal talks shut down and the markets are tanking. meanwhile, france is swearing in a socialist president have voters said they were desperate for anything that could spark a change. joining us now to talk about the golden state's woes and what they may mean for all of us, joe davis and chris garion from the "new york times." governor, let me start with you. it seems like california is in this budget mess year after year after year. there is a patch put on it, the can is kicked down the road and we're in this mess again. what should americans who don't just live in california take from this latest episode. >> well, clearly you have to try to live within your means, particularly over the long haul. and to governor brown's credit, matt, when he came in, the deficit was 26 billion. even with today's bad news it's

down to 16 billion, so that's 10 billion that's sdamdisappeared. he has a workout plan to fiscalship. that's his number one, two and three priority, to get the budget back in order. >> chris, you covered this in sacramento for the l.a. times. let's talk about the dynamics in the capital. i know speaking for someone who is from los angeles have the same view of the capital as a lot of folks have for washington, and that is that it's a cesspool for special interests and can't get things done partly because of these majority comments. what's your take? >> a lot of people feel like sacramento like they do about washington. there is a lot of partisanship, a lot of gridlock in the capital, and californians had very high expectations for the government, and now in this area of austerity, government had to cut back a lot and california was left with choices on whether

to support new taxes or see government shrink even further. >> if you talk about the school situation, i understand governor brown is trying to fend off cuts that would be triggered if he can't get voters to approve a certain set of tax hikes this fall. how did it happen? california went from near the top of the nation, reputed everywhere around the world for its terrific schools in the '60s and '70s, and now california is near the bottom for per pupil spending. the achievement gap is enormous, all of this over the course of a generation. it's hard to blame the leadership involved, or do you think it's something deeper as well as the citizenry is failing to grapple these issues? >> i don't agree with your analysis completely, but california is the tenth largest economy in the world and represents 12% of the american population. if you look at the electoral votes today, california's electoral votes for president are more than texas and new york combined. so it's still an economic powerhouse notwithstanding its

current woes. and with all the problems in sacramento, within about a 45-minute distance in northern california having google, apple, twitter, facebook, cisco, intel, hewlett-packard, oracle, it's still the largest technological impact in the world. do we have fiscal problems? yes. is jerry brown trying to work them out? yes. it requires a lot of cuts and billions of dollars in taxes, most of which will fall on people making more than $250,000. >> obviously what gray davis says is true, but you're talking about a private sector of health and innovation, but just massive public sector dysfunction. as somebody who is in sacramento on the ground, what do legislators say behind closed doors on this? they know the system can't be working. what's the way forward?

>> a lot of people say california is just built for dysfunction. it's almost impossible to raise taxes because you need a two-thirds vote and republicans won't go along with that. up until about a year ago, you needed 2/3 vote just to pass the budget at all, then you have amendments, legal red tape and you're left with a situation where there is very little wiggle room, and voters who don't always have an appetite for either big budget cuts or opening their pockets wider to pay more taxes. >> so gray, isn't one of the big lessons coming out of california is we need filibuster reform at the national level? the idea you need super majorities in california, my home state, your home state, is the best evidence you need that you can't govern a modern, 21st century society when you need 2/3 in the case of california or you need 60 votes in the senate and be able to get anything done. >> you really need 99 votes in the senate, matt, because any one senator could put a hold on

any confirmation or piece of legislation. he or she may catch a lot of flak but they have the power to do that. on the plus side, let me just say this. i think the voters have gotten the message and there are now three reforms taking place as i speak. our primary comes up in a couple weeks. we don't have a primary anymore. we have an open primary meaning the top two vote getters, regardless of party, run off one another. the hope there is more pragmatic people will get elected. california needs to actually solve the problem. we also have the voters draw the legislative and congressional lines. that was a reform. and as chris alluded to, we had a change in the budget, a budget without a tax increase. it used to need 2/3 vote to pass, and now it needs a majority. it won't happen overnight, but my hope is over the course of four years, you'll see some improvement. >> chris, it's not just that tax increases are needed, although

they may be part of any deal, because they still have the tremendous sweetheart deals where they can retire at age 50 or in their early 50s with 90% salary, not something most people can do, yet they're very powerful in terms of their ability to shape whether there is going to be any reforms to that. are there any other promising options froor reform that you think need to be high on the list. >> washington is filled with very powerful special interests. unions usually have a lot of sway in the capital. right now governor brown is relying on them heavily to promote his tax campaign, but he's also negotiating with them to try to find reductions in state payroll. so it's a tricky situation and one they have to balance a lot of competing interests. >> so gray davis, just a last question for you, then. you're freed from -- you're not running for higher office again, i assume. you're free of all these political constraints. if you were a benevolent dictator, what are the top three things we need to do to get california's fiscal house in order so it doesn't just become

about are we solvent, but can we renew california, improve teacher quality, improve schools, a whole agenda beyond just being able to balance the books? >> i would go with -- the first thing i would do is support governor brown's plan, both the reductions and the temporary tax increase. i say temporary because some of them will last for seven years. but when that process is over, we have to rethink how we finance government in california. research universities got built, generations had the chance to go to school virtually for free in those days and they've made huge contribution to see our economy, providing opportunities for people to live well and changes, i mentioned apple, google, twitter, facebook, those changes have reverb rated around the world. so we have to understand that after these temporary taxes come off, we have to figure out what permanent financial fix we're going to put in place because we have to do our part to match what previous generations did to make this state great. >> all right, gray davis, we'll

be watching this in california. former governor gray davis, thank you for taking the time. coming up, developing news this afternoon, probes and protests. jp morgan's $2 billion blunder as protestors shout out at the daily meeting. plus, this country is in need of an old-fashioned christian revival. and later, are you in need of some alone time? how does a year solo on a deserted island sound? the man with that plan, ahead. for three hours a week, i'm a coach. but when i was diagnosed with prostate cancer... i needed a coach. our doctor was great, but with so many tough decisions i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options. for me cancer was as scary as a fastball is to some of these kids. but my coach had hit that pitch before.

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some developments in the growing scandal of jp morgan's $2 billion debt gone bad. the investigation department has opened an investigation into the loss. the new york bureau of the fbi also apparently involved. meantime, shareholders joined normal americans outside the meeting in tampa today demanding accountability all the way to the top. >> the bank's engaged in a lot of predatory practices, something that might have been illegal. i'm not sure what would have been illegal, but it was never investigated. chase might have lost $2 billion, but i wonder how many will come out of the ceo's pocket. i wonder how many high level executives will feel the hit. >> jamie dimon said the quote, the buck stops with me. executives tied to the loss, including the former head of the risk management division who has since stepped down.

with that or tuesday mega panel steps in. how is that for a segue? karen, susan and jimmy. good to see you in person. let me start with you. i feel like a $2 billion loss. in a way, capitalism works. the shareholders are taking the hits. i guess what upsets me so much about this story is that jp morgan and jamie dimon and their lobbyists have been the chief fighters against the higher capital levels and against the derivatives regulation that would make sure taxpayers are not on the hook when big banking bets go bad. right? >> i see what you're saying because it's important to keep in mind of that 2 billion, they will still show a profit of several billion. >> i understand. >> what concerns me is is they had 40 regulators in there. what are they doing and why weren't they -- >> they will never know as much as the bankers do. that's exactly why you need these capital levels. >> they were working inside the firm. they were assigned to regulate

it. >> i understand, jimmy, but i guess the point i'm making is no matter how smart your regulators are, they're never going to be as smart as the folks on wall street who are coming up with ways to get paid and come up with these risks. you need capital and you need a way in the derivatives. if they pay, that's fine. >> not only do i know all the lobbyists in jp morgan, worked with them in the senate and the banking committee and respect them all because they're good people don't make them evil. >> having said that. >> i always thought jp morgan chase was the only bank that could actually get it right. apparently not. if that's the case and they didn't get it right, then perhaps we need to rethink what your capital requirements are. as our friend dylan ratigan has said, if you want to play in the big box, you have to play with big bucks. >> that's the point, karen,

right? as long as you have enough protection and enough buffers so the taxpayers are not on the hook, who cares, right? >> again, what we're seeing at the core of this and i think what most americans take away from this is that actions and consequences may again be disconnected. potentially they will do clawbacks. i hope they do, because can you imagine when they do their been us reportings and people seem to be getting lots of big bonuses, because as you pointed out, they're going to still make money. but yet it just doesn't sound right. but i think part of the problem -- to susan's point about the regulators were in there, i think part of the problem is, again, i don't actually think the people who were working at the bank know more than the regulators. i think part of the problem is that too many people don't actually know what's really going on, and i think you're starting to see, sort of, at the grassroots level is actually some conversation coming both on conservative circles and more liberal circles that we may need to break the banks up, and that

might make regulation a little bit easier so transparency is more possible. when you have these massive institutions, i think we're still where we were in terms of the ability of trying to regulate something -- >> and yet, just to toss in, the canadians were always the counter to that because they have a more advanced banking system than we do, but they emerged totally unscathed from their crises. we didn't. the idea that the people in charge of this, the whole little chief investment office unit, they've been making probably $10 million a year for the last five years, they may walk away, all of them, with 60, 70 million while incurring a $2 billion loss that my guess is, when the numbers are done, which means on net they'll destroy value at the firm, yet they'll still walk away rich. that's what out rages people about the financial crisis. >> jp morgan will still be making money overall. >> that's jp morgan, not the whole area. >> the problem with the bill

that's being written right now in dodd/frank is people in government can't write it without the bankers. they literally can't do it. and that's -- there's a fundamental problem when the people who are actually writing the law needs to get the bankers in because -- and hathey're goi to regulate. >> the other thing susan is talking about, they can't write the regulations and they can't write the regulations because citigroup and jp morgan is suing them in federal court. >> you make different points. we're going to come back to them, because d.r. will be back on the bank's tail when he's back in the chair. i want to move on to another issue. the obama campaign is trying to draw a distinction between capitalists who make and capitalists who take. the pro-obama superpac has a new ad today about mitt romney and bain capital.

companies that came in made money is irrelevant. bain capital always made money. if we lost, they made money. if we survived, they made money. >> on the "today" show this morning, a senior romney campaign adviser fired back. have a look. >> these attempts by president obama to distract from his own poor record on the economy is the biggest smokescreen since mt. st. helens erupted. >> karen, i want to start with you on this. i'm curious from a political angle, ads like this and the painting romney and the bain capital tenure as heartless, evil, repatious capitalists, i have a feeling most voters have a feeling on this already. what's the strategy on this? >> number one, most polling, believe it or not, shows us that with the public at large there is still a lot of room to define romney, because while his name recognition has gone up and some

of the flip-flop messaging has gotten through, they still don't know a lot about -- when you ask, they still don't know a lot about his, quote, unquote, business record or even his record as governor, because, you know, most americans have a life, unlike the rest of us who follow this stuff so closely. so i think what the democrats are doing is they know they've got room to define this. that's a. and b, i think it was very fair game because it was romney himself who tried to put up his bain years as evidence of being a job creator, and that's where they're going after him to say it's not about bain, it's about romney saying that being at bain was about job creation when they've already had to revise those numbers down from 100,000 to 10,000, a, and b, the romney team is not telling the full story. the company -- companies that they went in and quote, unquote, restructured, the bain investors always got their money back. sometimes these companies went on to be successful, sometimes they didn't, and they were restructured right out of business, and sometimes they

relied on what? government subsidies paid for by taxpayers. part of it is filling in the story. >> jimmy, karen got an a and a b and a sub-a and sub-b in that explanation. >> she's very good at what she does. >> romney, in the cbs "new york times" poll, got 46% to obama's 43%. >> i'm not a fan of this ad. i think he's right. capitalism is capitalism. it's good and it's bad. it's pretty and it's ugly. and by the way, that's the way it works in capitalism. now, here's the problem. let me finish. >> not all capitalism borrows money and -- >> karen, karen, let me finish this, okay. >> but you still have to tell the full picture. that's what i didn't like about ratner. >> what i'm saying is i'm with you. romney has a credibility issue. romn

romney, as seen by the american people, lacks credibility. and this ad draws to the issue about him being incredible, of him lacking a consistent narrative other than he doesn't tell the whole story. i don't like the ad, but guess what, it goes to the point which he can't seem to put all the facts out there. and then guess what? the obama campaign will. >> i think there is something notwithstanding what jimmy said, there is good capitalism and bad capitalism point. the private equity model has a lot of issues you can raise with it. borrowing lots of money and immediately paying that out in fees so the private equity firm is taking basically its entire liquidity out front and based on what it has afterwards, it's not like a microsoft or steve jobs or entrepreneur who is just creating jobs. >> but if he has to explain what this is, it's already a losing battle. let's face it, there was also a romney ad that had a bunch of people praising what he had done

for our town. so these ads work both ways. to karen's point -- >> we have to let susan finish. she's been so polite and she's paid such a price. >> i am the only republican here, so maybe just a little bit of air time. >> you're going to get the last word. >> going to karen's point, this is a strategy the obama people are trying to put on because they don't want to have to run on their record. that's what this race is. if the romney people are going to be successful, it's not going to be explaining the difference between what bain did or did not do, it's going to be making this a better referendum on president obama. >> we'll be hearing a lot about that, i know. the panel stays. up next, colonel lithel joins us. he was on the ship when they went after al oes he think they today? we'll be with him when we come back. [ female announcer ] want to spend less and retire with more?

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we have a breaking story coming to us from the middle east. a suicide bombing on a ship. >> the boldness and effectiveness of this attack sent almost everyone -- >> people think this death toll will surely rise and an attack against an american ship in modern history. >> that will bring the death of american soldiers to 35 injured. >> we will find you and the price we will exact will far exceed anything you may have gained by inflicting this outrageous act of terrorism. >> that was the view from the outside. here with us, the man who lived it. nearly 12 years ago, commander kirk liphold was in charge of the navy destroyer u.s.s. cole when suddenly it was rocked by an explosion, killing 17 of its sailors and wounding dozens more. we now know that suicide blast was merely al qaeda's opening shot. but he says long before september 11, there were warning signs of a looming terror

threat, and had they been heeded, who knows how many lives could have been saved. joining us now to talk about al qaeda past, present and future is commander kirk liphold, recipient of the defense superior service medal and author of "front burner." thank you for joining us today. let me ask you, as you went through the aftermath of that horrific day, why, in retrospect, and i know you talk about this in your book, why didn't the nation view this as more of a wake-up call and take more agressive measures that day skpeen before? >> i think we as a nation had developed an attitude that if we died overseas at the hands of terrorists, we would be willing to die those deaths az price we pay on the international stage. when you attack buildings and embassies, you're attacking things that house and represent u.s. interests. when you attack a war ship, that's something that defends u.s. citizens and economic interests around the globe, and

our failure to respond to what was especially an act of war clearly defined that we were unwilling to do anything, and it em boldened al qaeda to continue with the 9/11 planning and ultimately the attacks 11 months later. >> susan has a question? >> commander, looking back we're all aware of what happened on the u.s.s. cole, but in your book, what do you say maybe we're not aware of of things that happened while the attack happened or immediately thereafter? >> i think one of the great unsung things is that event was somewhat overshadowed by 9/11, and the opportunity for me to publish this book and get the word out that i was blessed with a great crew of heroes that morning who did a phenomenal job, it speaks to the training we have in our armed forces today, that even in a moment of crisis when we had no way to tell the crew what had happened or what was going on, they reacted by saving that ship and their shipmates, and in a larger

perspective, our government reacted to it with a phenomenal effort to get the forces in place within a matter of 17 days so we could bring cole back to the u.s., rebuild her, and three weeks ago she deployed out for the sixth time since we repaired her. >> karen has a question? >> oh, i thought jim was going to get to go next. so here's my question, commander. based on where al qaeda was at that point in time and the reports of what we know now about, you know, certainly a number of the major leaders have been killed or taken down, what's your assessment of sort of where we are in our relationship to understanding the threat from al qaeda? >> i think we understand the threat but we are underestimating long-term ramifications of their capability. while we are taking some of the people out, as we did a couple weekends ago when we took out the videographer alcuso in yemen, the reality is we have a program in place that some will

say is effective with the drone program, every al qaeda member that we kill is one we kill for the sake of intelligence because when you learn how they recruit, train and finance them, can you really target them for defeat. while the face appears detective, i think the drone program is setting up for large failure in the future, because eventually they will find a way around it, and we will not have those interrogations in place that we have the intelligence to be able to defend our country. >> jimmy? >> so commander, you are a former commander of a u.s. naval warship. and people -- we've talked in the past on this show about how it took 13 men, possibly women, to go in and get osama bin laden. a small number of people. a relatively inexpensive yet successful mission, if you will. should we take the defense department, shrink it immensely, much to the detriment of your former career, and then take our

intelligence apparatus and develop that immensely and use intelligence to go and find the people who want to blow up the next ship or the next building? >> i don't think you'll be able to get a combination on either of those. i still believe that you need to build up the intelligence services to be able to get the type of intelligence not only for the strategic decision makers to work but those that are at the tip of the sphere defending their units on a tactical front whether it's in the foxhole in afghanistan or the native ships safeguarding the communication. regarding the military itself, i think we have to look at what the threats are. short term it's al qaeda. mid-term it's iran, but long term i look at a country like china with a growing economic ability that is not a democracy that is clearly asserting itself in the south china sea in an area like the spratley that we saw last week where we could pose not only a regional threat but a strategic threat to our

nation. >> i want to put up a quote, because one of the chilling things in your book was you wer coincidence on the morning of september 11, and one of the things you said that morning to one of your colleagues, which was before you or anyone was aware we had been attacked was, i don't think america understands. i believe it's going to take a s seminal event, probably in this country, where hundreds, if not thousands, are going to have to die before americans realize we are at war with osama bin laden. obviously, very chilling. just briefly, and kind of eerie, do you think there is still a complacency in american culture today in the wake of us actually getting osama bin laden, about the threat? >> i don't think americans are complacent, i think it's a matter of both the military, our political leaders and the media in keeping the american public informed on exactly what the threats are, what they could do harm to us, and the fact that the american people, once

educated and they know what the threat is, will demand their political leaders put the tools in place to keep our nation safe, whether that's with military force, expanded intelligence capability or with economic decisions that need to be made and engaged around the >> commander kirk ok is "front " an important book. thank you for writing it. i know you paid a personal price in your career even though there was, as i know you wrote, there was accountability for your role but without blame. and it's a longer story. people should read the book to get a sense of it. thanks as always to our mega panel that can move from issues of finance to security seamlessly, and politely, susan, so congratulations, and thanks, as always, to all of you. we'll see you guys soon. if that conversation made you just want to get away from it all, next we're going to tell you about one man's extreme plan to do just that. [ male announcer ] what if you had thermal night-vision goggles,

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provocative case. here to break down his argument is ross. he's author of "bad religion." welcome, ross. good to see you. >> thanks for having me. >> the book is fascinating, and i want to start with a quote that helps frame your argument if we can put it up. one thing you say is that's because america's problem isn't too much religion or too little of it, which both sides seem to say it's bad religion. the slow motion collapse of traditional christianity. this is the real story of religion in america. for all its piety and fervor, today's united states needs to be recognized for what it is, not a christian country but a nation of heretics. explain what you mean by that. >> as you said, i think there is an idea in american conversation that our religious future is either traditionally christian or secular, atheist and so on. we have this sort of binary c

conception of what religion is and can be. christian institutions, my own church and so on, have gone into decline, but the nation as a whole is more religious than ever, maybe more so. so it's kind of a do it yourself form of christianity which can have very positive aspects, but it also leads tomorrow positive -- i think they don't test their own religious assertions and they're more likely, then, to say, well, whatever is coming out of my own soul must be the voice of god himself, or to conflate religion and partisanship in certain ways. you basically move from billy graham on one hand to fill ostein who says billy graham calls it a day of reckoning.

and joel ostein. >> you talk about the sort of reverend graham or martin luther king as a more aspirational or demanding form of christianity? >> sure. >> how did we get from that to where we are today? >> sex and money, i think, is a youthful way of thinking. you go back to the new testament, right, you go back to the figure of jesus, you have a strong new testament emphasis on chastity before marriage and mon monogamy after marriage that doesn't fit that neatly, and you have the great wealth that doesn't fit very well with a very material sticistic society the left doesn't want to think about the sexual side, the sort of personal responsibility side of the new testament message,

and the right doesn't necessarily want to think about what jesus had to say about wealth and money. so people on both sides sort of fit a jesus to their own premises rather than confronting a jesus who challenges them, you might say. >> is this both a failure of the traditional institutions to hold fast or adapt, or is it a matter of some of the new institutions that you critique, i think, almost pandering, that's probably the wrong word, but cling to people's desires, perhaps, than the more demanding ethic that christianity would impose. >> you see a lot of figures in our culture. i mention joel ostein, but ktupc chopra, any religious person.

at the same time, look at someone like the catholic sex abuse crisis. obviously the traditional institutions have failed in profound ways that have turned americans off, so it's both at once, i think. >> now, you talk about some of the traditional -- or the way that the traditional sins, if you will, pride, vanity, adultery, greed end up being perverted in their modern treatment by various, evolving institutions. say more about that and where you think it needs to go. >> it just becomes easy when the only god you worship is the god you find within, right, to sort of end up baptizing narcy sicna it can show up in your personal life. you have authority telling americans saying god loves them, it's that god loves them exactly

what they are and would never think of judging them, which is not the traditional christian message. it balances inclusion on one hand, god's encompassing love and judgment as well. it's that balance i think we've lost. >> how does this whole analysis play into the current presidential campaign. you have obama who made religion a piece of his campaign in 2008 and you have mitt romney who faces something at the core of his being that he feels may be a potential political liability. he seems to be much more reticent about talking about his faith. what's your perspective and your argument? what light does it shed on this race? >> i think part of what happens as religious institutions decline, there's still religious energy. people still have religious impulses and they're more likely to than pour them into partisan politics. i think you saw this with the obama campaign in 2008. it's hard to look back at that campaign with the celebrities singing for obama and youtube

videos and the halos behind his head. i know we have another one on the cover of newsweek this week, but that sort of misplaced religious fervor, i think, that maybe even some obama supporters would agree now have been a little bit misplaced, i think that's characteristic, but you see that on the right as well, where, if you look at sort of the apocalyptic response that the obama presidency got from a figure like glenn beck, say, you see religious zeal being channeled into partisan causes because the older religious institutions aren't strong enough to hold it. people don't identify as methodists and catholics and presbyterians as much so they identify as democrats and republicans with a religious zeal that i think feeds polarization, inevitably, because if politics is apocalyptic or messianic, it's very hard to compromise. >> very briefly, what's the way forward? what revives christianity?

what would that entail? >> i don't have a five-point plan. this sounds sort of like a cliche, but american christians need to be better christians. it sounds simple in a way, but americans need to, in a sense, go back to the new testament and look at the parts of their own religion that should challenge the way they live rather than just affirm it. and, again, easy to say, hard to put into practice in my own life very much included, but i think that's what we need more of in american life. >> all right, it's the book "bad religion, how we became a nation of heretics." a very provocative argument done in not a holier than thou way. coming up in "hardball," the bane of his existence. defining mitt romney. who should we really be mad at? that's next.

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protests continue outside jp morgan's annual shareholder meeting today. but here's david goodfriend with the rant on who is really to blame today. the floor is yours, david. >> i'm not going to get mad at the ceo, jamie dimon, over the $2 billion loss. no. it's not the same tricks that got them into trouble as last time, and it's not whether mr. dimon should be held accountable -- he should -- it's whether they should form law to prevent this form of gambling to protect the dollars.

the lesson here is for the good men and women who earn government wages and are charged with enforcing our nation's financial laws. they need to take a look at where they get their facts and who they should trust to get their reliable information. first a little background. when congress passes a law, that's only the beginning. to put that into effect, the government spells out exact detail for what is and is not allowed. congress should add a black and white coloring book. the agency then fills in the colors. depending on what colors they choose, they can change the pictures considerably. they have to propose a new rule, collect comments from the public, and they have to make sure anything is protected on the record that they cover, and you cannot just take the bank's word for it. right now a whole gaggle of federal agencies is writing the rule that would put the reform

law into effect. the fed and others are filling in the colors to paint the picture. they're working on the final version of the so-called bocar rule for hedging by the bank using congress men's money. now, back in february, jp morgan chase sent a 67-page letter to these agencies complaining that the proposed rule was way too broad. they said that the rule would hurt american companies. they said the new rule would impose high costs on banks and companies and the american economy. they said the banks need to hedge their trades in order to protect the safety and soundness of banking itself. and my own personal favorite, they complained that the proposed rule wrongly assumes that banks will try to, quote, camouflage prohibited trading in order to evade the law. the nerve! the problem is, it seems that at the very moment jp morgan chase wrote that letter, they were engaging what ceo jamie dimon

now calls stupid hedge bets with depositor's money. if they're correct and the actual losses turn out to be double the current figures, there might even have been some camouflaging going on. so listen, you good men and women in the financial regulatory trading community, jp morgan chase is probably not the best place for you to get your facts. if we want to end too big to fail, we also have to guard against too big to be wrong. of course, the banks you regulate want looser standards. of course, they'll tell you anything less would end life as we know it, but that doesn't mean you have to believe them. get a second opinion. get it on the record and then get those rules on the books. your country is counting on you. matt? >> david goodfriend, we've got just about enough time for me to say amen. very well done. the only thought i would add is that the real hutzpah here is that jp morgan and others fight against the capital standard, ic