and main street found its might again. and main street found its fight again. and we, the locals, found delight again. that's the power of all of us. that's the power of all of us. that's the membership effect of american express. good morning from new york, i'm chris hayes. hillary clinton heads to israel today after meeting in cairo with field marshal, head of thejipgz military council where she pressed the military to work with newly elected mohammad morsi to transfer to full rule. we'll have ed conered, a partner at bain until 2007 later on today to sort out romney's

record there. first, my story of the week, the voting rights act and how it may determine the outcome of this year's presidential race. in closing arguments this friday, attorneys for the state of texas argued the state should be released once and for all from the department of its voting business which was clearly authorized. the case is widely expected to wind up before the supreme court where we find the five appointees declaring it's no longer justified. the portion of the act at issue covers nine states and counties and townships and seven others largely in the south that have a history of erecting barriers. in year's past, this took a variety of forums and grandfather tastes that stopped newly formed slaves from voting and literacy tests or simple poll taxes that forced people to pay to vote f they could afford it. after one of the most powerful and courageous social movements in history, one that took the

lives of 40 people, lbg signed the voting act in 1975 ending these practices. >> wherever by clear and objective standards, states and counties are using regulations or laws or tests to deny the right to vote. then they will be struck down. if it is clear that state officials still intend to discriminate, then federal examiners will be sent in to remgster all eligible voters. when the prospect of discrimination is gone, the examiners will be immediately withdrawn. and under this act, if any county, anywhere in this nation does not want federal intervention, it need only open its polling places to all of it people.

>> it wasn't until the passage of the voting rights act that black people in the south and some places outside the south could actually exercise their right to be full participating citizens in american democracy. texas would now like to get rid of that rule and more broadly do whatever it pleases as far as restrictions on voting are concerned. just so happens while texas is pursuing an end to the right of tyranny, states around the nation under republican control to the poor and marginal. in pennsylvania, new voter i.d. law recent study found that 67 $750,000 people or one-tenth of the electorate do not have i.d.s to vote in november. proof of citizenship, which 60% of alabama voters or former voters do not have. brennan center for justice estimates the total number of voters nationwide imperilled by laws that were adopted or go

into effect is more than 5 million. remember the margin of victory the last time a president was up for re-election was just over 3 million votes. republicans will cite the odd voter fraud, but any and all serious inquiries into the topic find the problem is statistically nonexistent. even u.s. attorneys hand picked by the bush administration were unable to find much of anything. >> we took over 100 complaints and we set up a hotline. i believe there to be prosecutable cases but at the end of two years i couldn't find one case i could prosecute. >> u.s. attorneys who balked at resources found themselves condemned by local republican bigwigs and ultimately fired by the white house. that was the core of the u.s. attorney scandal no amount of vigor could change the fact that vigor fraud or and impersonation is not existent. this handy graphic shows, ufo

sightings are far more common. because the effects of restrictions on voter registration drives and requirements to show i.d. falls on people and people a loaded racial subtext. that's what eric holder was referring to this past tuesday. >> under the proposed law, concealed handgun licenses would be acceptable forms of photo i.d. but student i.d.s would not. many of those without i.d.s would have to travel great distances to get them. and some would struggle to pay for the documents they might need to obtain them. we call those poll tax as. >> to conservatives, there is no greater a front than to alleged

racism. how could he compare the practices of the racist old south with a common sense neutral desire to simply ensure clean elections. but it's worth remembering what the original poll tax was like. sure, we now understand it as a tool of white supremacy or ooppression, those who pushed them could claim they had nuthing to do with race. on their face, they weren't discriminatory. shouldn't people be able to read if they're going to vote? isn't that common sense? they were designed and implemented to create disproportionate racial effects but the genius in many ways, intent doesn't matter, effects do. lawyers for the department of justice not the intent. no one has to do any mind reading. we can leave aside the question of rick perry and what he feels in his heart of hearts. it was mostly white racist democratic politicians who over

saw the system and more than a few white republicans who boldly championed civil rights george romney of michigan who march would the naacp in 1963 and walk out of the 1964 republican convention. those days are long gone. lbj's embrace followed by the republican strategy has led to our current situation in which republicans don't have african-americans in their coalitic but they have most of the. mitt romney mentioned not a peep about voter restrictions during a speak to the naacp this week. joe biden surely did. the awkward truth is when a party gets absolutely zero support, it is strategically sensible to attempt to reduce their participation in voting, which means it's entirely possible that romney's fellow republicans want to make it

harder for poor people of color to vote simply because they're likely to vote for democrats rather than they aren't white. but as the voting rights act says, the intent doesn't matter, it's the effect. either way it's wrong. i want to talk with our panel after this. [ kimi ] atti and i had always called oregon home. until i got a job in the big apple. adjusting to city life was hard for me. and becoming a fulltime indoor cat wasn't easy for atti. but we had each other and he had purina cat chow indoor. he absolutely loved it. and i knew he was getting everything he needed to stay healthy indoors. and after a couple of weeks, i knew we were finally home! [ female announcer ] purina cat chow indoor. always there for you. [ slap! ] [ slap! slap! slap! slap! ] [ male announcer ] your favorite foods fighting you? fight back fast with tums.

calcium rich tums goes to work in seconds. nothing works faster. ♪ tum tum tum tum tums trick question. i love everything about this country! including prilosec otc. you know one pill each morning treats your frequent heartburn so you can enjoy all this great land of ours has to offer like demolition derbies. and drive thru weddings. so if you're one of those people who gets heartburn and then treats day after day, block the acid with prilosec otc and don't get heartburn in the first place. [ male announcer ] one pill each morning. 24 hours. zero heartburn.

good morning, we're talking about the voting rights act and mitt romney's speech and joining me today we have deedric mohammed, victoria de frfrances.

and steven carter, author of the new novel "the impeachment of abraham lincoln" law professor at yale university. i had just cracked into the book and it was excellent and i loved your previous work, so i think everyone should go out and get it. i found the subtext of everything that happened this week fascinating. mitt romney went there to speak and the under lying thing that texas is going to be able to loose itself. it was interesting that mitt romney did not address this at all. >> particularly that attorney general holder spoken that monday and as biden would say the following day, voting rights is the key aspect of what the naacp is about. when you look at the reactions to romney's speech, you understand that because it

wasn't speaking to the needs and concerns of the constituents and it was not only what he said, but what he didn't say. his father took a strong stand on the voting rights and he couldn't mention voting rights on his speech to the naacp in texas while there's a major lawsuit going on shows to me that either he doesn't take that issue seriously or wasn't taken that address to us seriously. >> but it seems to me there's this, there's a situation in modern politics where the racial politics and the racial history are also embedded in a system where there's just this, there's a split among african-americans in their voting behavior that is unlike any other subdemographic in american life. you have this situation in which 95% of black voters are going to vote for your opponents, right? so, it creates this bizarre political relationship. i mean, there are some people who are saying, what the heck do you want him to do with the naacp? he's a republican and no one in

that room is going to go and vote for him. what do you think? >> on the one hand, i give him a lot of credit for showing up and taking those boos and keep on smiling. that's not an easy thing to do these days. all the criticisms of the speech aren't fair, not that he talked aboat voting rights but he got booed when he mentioned obama care. but having said that, i do want to say something about the voting rights act and the voter i.d.s. a lot of bad people for bad people are fighting for these laws. but we also have to recognize that the resistance to these laws is it's at best a rear guard action. we're moving to a national security future in which everyone will have to prove their identities several times a day for all kinds of things and in the end, we'll have to accommodate ourselves to that reality. painful it's going to be. >> i was just on a book tour in

seattle and went to an office building in seattle to meet with some folks and i went right into the building and i went up to the eighth floor and i was like, is no one checking my i.d.? i realize now that seems strange. of course, walking into a building seemed like something one just did. >> as opposed to this building this morning, for example. >> which is basically like ft. knox. >> in texas what we're seeing is this perfect solution looking for a problem. >> right, that's the issue. >> as we were looking earlier, chris, and you were talking about this and no evidence of systematic vote fraud but such measures do suppress turnout. i have no problem with an act like this if the cost of suppressing turnout is really going to fight voter fraud. there was a study done in texas where we saw that you need a valid form of i.d., it doesn't just mean a driver's license. up to date and have your valid

name on it. if you get married, you change your name. that means that if you look at the face of it, 91% of latinos could vote, but when you put in that valid point, that's 88% among african-americans that goes down to about 82%. that is a discrepancy which does not gel with section five. the data is there. >> i want to take a it back to the question that you asked. what would you expect someone like mitt romney to say, what i would suspect is what mccain did. want to bring in african-american voters and we have a presdage that used to vote republican and then the political line of the republican party changed, then the african-americans started voting for democrats. mccain when he came he gave more of a detailed speech but i think it was a very respectiveful speech. it was taking a lot of shots and

a lot of his answers about -- shots against naacp policy and then his solutions were just really rhetoric and just really free enterprise and no explanation. >> i want to play a clip of him making an appeal which was a classic one. this is him at the naacp convention in houston. saying, peer into my soul. >> i believe that if you understood who i truly am in my heart and if it were possible to fully communicate what i believe is in the real enduring best interest of the african-american families, you would vote for me for president. >> if you want a president that would make things better in the african-american community, you are looking at him. >> again, a tough sell, but what was the distinction between the mccain speech and the romney

speech to you? >> mccain when he spoke it was 2000 and he was talking about educational policy and he talked about tax credits and greater bonuses and awards for teachers who were in low-performing areas while romney was saying things more like peer into pie heart m. very general things and we have to free the market and somehow things will get better and then specifically saying we will get rid of the affordable health care act which has closing racial disparity. >> saying things like peer into my heart doesn't work if you'll address any voting bloc. if you want to talk about mitt romney talking with the naacp, then you need to talk about things like the voting right act, but focused issues but stop and frisk policies in new york city and why don't we talk about the drug war and things that actually affect this level of the population or this group and then i think that, i think it's

not only about race, but a certain level of class applies here, too. why would voters necessarily believe that mitt romney will do anything for african-american lower income population if wall street are his biggest donors. >> that's a great comparison, actually. good point. >> that level of detail that mccain had the naacp, romney had -- national association of latino elected officials which took place a couple weeks ago in orlando. rom no showed up and he bashed the president over the head with immigration. yeah, you could feel the breath in the room just be taken. but then he went on to lay out a detailed approach of what he would do with immigration. he'd say i'd enforce the borders a little bit more, i would raise the caps on family reunification visas. i would increase work permits. he went down the line. you didn't necessary like his position on immigration, but here's my alternative. romney in saying, we're going to

do away with obama care, here are my projects x, y and z of the alternative. >> that is the difference between trying and not trying. >> still, even so, i think that before we go too far down the partisan road, flip side what you said in the intro. republicans have no reason to go after the vote in the serious way because black people aren't going to vote republican. for the same reason, democrats have reason to give anything to black voters as a group because they know they're all going to vote democratic. if you look at the data, one thing that you find the situation of poor, black people is just as a bad under democrats as it is under republicans. >> let's take a quick break and let you get back at that. tdd# 1-800-345-2550 let's talk about fees.

tdd# 1-800-345-2550 there are atm fees. tdd# 1-800-345-2550 account service fees. tdd# 1-800-345-2550 and the most dreaded fees of all, hidden fees. tdd# 1-800-345-2550 at charles schwab, you won't pay fees on top of fees. tdd# 1-800-345-2550 no monthly account service fees. tdd# 1-800-345-2550 no hidden fees. tdd# 1-800-345-2550 and we rebate every atm fee. tdd# 1-800-345-2550 so talk to chuck tdd# 1-800-345-2550 because when it comes to talking, there is no fee. who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ. women and children should avoid contact with application sites.

discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or, signs in a woman which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are, or may become pregnant or are breast feeding should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. talk to your doctor today about androgel 1.62% so you can use less gel. log on now to androgeloffer.com and you could pay as little as ten dollars a month for androgel 1.62%. what are you waiting for? this is big news.

so, we're talking about mitt rumny's speech to the naacp and, stephen, you made a point in which people have made in a variety of different ways, both under president barack obama and previously about the democratic

party's relationship of black voters and the political effects of the fact that african-american voters vote so, in such large numbers and high percentages for democratic politicians, which is that republicans don't have to court them, but that democratic politicians can take them for granted, essentially. i've heard this argument in many ways and, in fact, there was some reporting about people being frustrated at the naacp convention that the president himself did not come that joe biden did not come instead. what do you, how do you -- >> again, just the point about that african-americans vote republicans. i don't believe that. not that we won't vote republicans, i think oftentime republican party is not providing much for african-americans to want to vote for them. putting the honest on the african-americans that we have prejudice, i don't buy into it. they do need to court us just like every year democrats are talking, democrats haven't won the majority of white vote since

kennedy or something like that. constantly courting white male vote. so, yes, all constituents should be courted and i don't think mitt romney did a very good and didn't do a very good job courting african-american vote and instead of saying there is nothing for him to do, there is records of people who stood by conservative principles who made a better, even george bush, i believe, like 10% of the african-american vote and i think he did court the african-american vote. >> i want it be clear, the reality of american politics to me in the post civil rights era, new deal to the signing of the civil rights act. you have to choose as political party whether you're going to have the white racist vote. you can't have a coalition that has them both together. that is just the reality of american politics. i'm sure people will be offended by that. i just want to be clear. not saying all, i'm saying the white racist is going to go to one side and black vote to the

other. why would you have a political collision that has both of those elements in them? >> that's something i always wondered. with latinos the republican party reach out and say you're socially conservative and we're church-going folks and also socially conservative and i'm just always surprised that there isn't more of a push. he mentioned it in its his speech briefly saying i would defend marriage. but just in pass aing. so, i was surprised he didn't try to establish more of a connection like that and just the broader strategy of republican politics. >> i think it's hard to do because the overarching theme of racism and prejudice that is involved. if we can go back to the point that maybe the democrats take advantage of the black vote, i think that's a problem the party has in general. an asemption not only african american voters are going to vote for barack obama, again, the environmentalists and the gay voters that will vote for him, again, no matter what

happens. that's why we've seen the democratic party just move to the center because the people they're trying to court now are those middle of the road voters and not the others. >> although that logic, the amazing thing about that logic should pertain, right, in classical science and it should pertain on both sides, but it doesn't. >> it is a problem. >> but i think it does pertain on both sides and that's one reason that the republican party lost the last election. both parties have a problem. both parties have a solid base, a base that they pay lip service to because the truth is, the republicans, if you look at the actual record in office, they never actually give much to the social conservatives. >> the social conservatives. >> they talk to them and the bills they pass not that much. both parties are fighting over the same small group of independent voters. >> i would just push back a little bit on that. i think that may be true somewhat at the federal level.

i think at the state level that's not true. when you look at restricks on abortion. >> that is what i was going to say. republicans get more votes at the state level than they do at the federal level. also at the state level, it's in the local churches that you find these various conservative groups going around and trying to do outreach. but trying to do outreach based on the social conservative ideas. >> i want to read this comment that romney then made about his own speech, he's talking about getting booed and he said, this is him in a fund-raiser the same night. he said when i mentioned they were going to get rid of obama care, they weren't happy. if i don't stand for what they want, go vote for someone else. your friends who like obama care, you remind them, if they want s'momore stuff from the government. >> in hindsight, maybe they should not have invited a representative from either

campaign. what this does, it will mobilize the base. my question is, is this going to mobilize the black base? is this going to anger the constituents the naacp to go back and fight stronger? this is a win/win and mobilize everyone? >> naacp invite both presidential nominees to come because, again, i think -- >> this gets to the exact thing that we're talking to. >> again, we want more from both parties, democrats and republicans who have the opportunity to have that interaction, but this whole and then rush limbaugh and others are taking it like really slamming down this whole free stuff piece and just the idea that minority voters just want free stuff while hard working, middle class and unsaid and white people don't want free stuff. i mean, this country in many ways was founded on free stuff, meaning the land. took genocide to get to the free stuff -- >> then free labor. >> and more recently, the great white middle class was built on a lot of free stuff on a lot of

free higher education and a lot of free access to highways of suburbia to be developed in subsidies on homeownership. so, just the idea -- it's been such a racist point in the past. i'm hoping mitt romney wasn't trying to go down that road, but some of the more extreme american activists. >> the welfare -- the infamous strapping young buck of the mythology of ronald reagan buying a t-bone steak. this happy couple used capital one venture miles for their "destination wedding." double miles you can "actually" use. but with those single mile travel cards... [ bridesmaid ] blacked out... but i'm a bridesmaid. oh! "x" marks the spot she'll never sit. but i bought a dress!

a toast... ...to the capital one venture card. fly any airline, any flight, anytime. double miles you can actually use. what a coincidence? what's in your wallet? [ all screaming ] watch the elbows ladies. until i show them this. the new oral-b pro-health clinical brush. its pro-flex sides adjust to teeth and gums for a better clean. the new pro-health clinical brush from oral-b.

a jaw-dropping new study this week provides insights to what is tying the scandals on wall street. a survey conducted found that at least 30% of professional services found that they feel pressured to act unethically or illegally. 39% said they believe their competitors are unlikely to engage and this week alone we

have financial scandals that seem to confirm the reports results. on tuesday, federal officials accused iowa-based brokerage firm paragreem financial of fraud and arrested after he apparently attempted suicide and left a note saying he stole more than $100 million from customers. on thursday, wells fargo agreed to pay $175 million to settle claims that its brokers added what the justice department called "a racial surtax to the loans of black and hispanic borrowers." the next day, jpmorgan revealed some of its traders sought to cover up the bad debts that contributed to its $7.5 billion trading loss and, last night, "new york times" reported that federal authorities expect to file criminal charges keying the key interest rate, we talked about that on the show last week. edward conner former partner at bain capital and author of

"unintended consequences" and alexis goldsteen returning and now a member of "occupy the sec" great to have you guys here. >> thanks for having us. >> so, ed, your book is about incentives, partly, and about incentives for investment and risk taking and one of the things that i have been struggling with in writing my own book and seeing the cascades of scandals seems incentives can go in a bunch of different directions and one way they can do incents have risk taking and also a lot of cheating and a lot of corner cutting and it seems to me that the culture of finance has something deeply rotten about it. do you agree? i'm serious. >> not a loaded question. i just think there is a lot of money changing hands on wall streets and in banks and you'll expect the bank robbers to be there. so, sure, is there criminals

involved in that activity and do we have to look carefully and root out those operations where we find them. every investor has to recognize that, as well. i am very fearful that i'm going to find one firm or another the bernie madoffs of the world who are stealing my money as opposed to investing it. society works on 95% of the people being hawnest and cooperating, no matter the supervision, which doesn't mean that honest people on the margin perhaps, do some things that are inappropriate. for the most part, cooperation is driving our economy and our civilization forward. much more benefit than costs. >> i would disagree with that because having worked on wall street, i mean, everything is a cost benefit aanalysis. what would the cost be if we were to violate this particular regulation and what is the ultimate fine. you are incentvised to push the envelope in terms of what's legal and what's not legal if

you know when you're caught the fine that is levied is less than the profit that you make. we are in an environment where we have seen 99% of the cases that the federal reserve has done in bank enforcement actions have not resulted in the bank having done any wrongdoing. not only have we not seen anyone go to jail, but people don't have to admit they did anything wrong when we see the regulators come in. you had this cost benefit analysis where it makes sense to violate regulations, but, since, we have this culture of immunity. >> i just don't think the math works because my experience in business is that people care greatly about their careers. if they get caught doing something inappropriate or they do something appropriate and -- >> the guy that blew up was able to go off and create a whole new hedge fund. >> i would say in the vast majority of circumstances if you

get caught with your hand in the cookieiar and get caught doing something inappropriate or if you take a legitimate business risk and it fails, a high probability that your career is coming to an end and the likelihood that you can get back into the game, again -- >> seeing a huge amount of bank as that are subsidized by the u.s. government and for both the banks and private companies and even some foreign governments and foreign companies and we haven't seen any punishment for any of those things, again, i say it, again, a culture of immunity and i don't think that what you're saying holds true any more and i don't think it ever did. >> two separate problems here. what are the people like on wall street? i know a lot of them and the people i know are not the people, in fact, cutting corners in the way that you describe it. >> i think. >> i think, i believe. but, please, let me finish. let me finish. >> sure. but that's not the larger point. the larger point is that you can't tell whethers the there's

been enough punishment until you're sure the crimes have been committed and many times the reason both sides settle, the government and the regulated entity is because neither one actually wants to push it. the government might lose the lawsuit or the entity might be taken down in a serious way. that's why they settled. we don't know in a lot of these cases. we can't tell from the fact that a bank failed that someone needs to be punished. >> just to ground it here. in the case of wells fargo, okay, we know that there was a compensation structure that pushed people into subprime loans and on a racial basis and these were people who were coming in that were black and latino, but the compensation structure, this is the doj wells fargo complaint. provided a strong incentive for wholesale mortgage brokers to originate a room as subprime even if they could qualify for a more prime loan.

resulted in discrimination on the basis of race and natural origin. so, this is, this is a case where we actually do have a settlement and we do have -- >> that's the complaint, not the settlement. >> right. >> but, they got hit with $175 million. maybe i should have done more -- >> that doesn't mean any wrongdoing. >> that's the point. $175 million is nothing. it's nothing. they barely -- >> $4.6 billion in quarterly profits. >> i think part of the settlement reflects what the government really thought. if they had a strong case, they could prove it easily and they wouldn't settle for a number like that. >> or, i don't know if that's necessarily true. >> avoid the litigation costs that would have gone along with it. >> naacp, also, had issues around the subprime lending, targeting with banks and we oftentime found that the most important thing was to try to get a change of practice and that's also the government is looking for, not necessarily

that we don't have a strong case, but the most important thing, what can we do now and that's the $175 million is for. to help people who have, who are in trouble around foreclosure and have had unsustainable -- >> we have bill black, who is a professor and also a former regulator. he specialized on financial fraud. we'll bring him into the conversation, right after this. us we made the right decision. so when we can feel our way through the newest, softest, and most colorful options... ...across every possible price range... ...our budgets won't be picking the style. we will. more saving. more doing. that's the power of the home depot. make room for savings with $37 basic installation on martha stewart living and platinum plus carpet. that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses.

the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement plans, they pick up some of what medicare doesn't pay. and save you up to thousands of dollars in out-of-pocket costs. call today to request a free decision guide to help you better understand what medicare is all about. and which aarp medicare supplement plan works best for you. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients... plus, there are no networks, and you'll never need a referral to see a specialist. there's a range of plans to choose from, too. and they all travel with you. anywhere in the country. join the millions who have already enrolled in the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations... and provided by

unitedhealthcare insurance company, which has over 30 years of experience behind it. today. remember, medicare supplement insurance helps cover some of what medicare doesn't pay -- expenses that could really add up. these kinds of plans could save you up to thousands in out-of-pocket costs... you'll be able choose any doctor who accepts medicare patients. and you never need referrals. so don't wait. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide. this easy-to-understand guide will answer some of your questions, and help you find the aarp medicare supplement plan that's right for you.

want to bring in bill black at university of missouri, kansas city. the best way to rob a bank is to owe one. something you spend a lot of time thinking about and also as a regulator, as a criminologist looking into about what the kind of conditions are that do produce either ethical corner cutting or outright illegal behavior. >> sure. so, we talk about crimnuogenic environments. environments that produce epidemics of fraud and we can give you imperical evidence on the debate you just been having.

so, for in the savings and loan crisis, for example, detailed investigations, the report of the national commission found that at a typical large failure, fraud was invariably present. we know that if you use a compensation system, you can produce endemic fraud. so, over 10% of the appraisers signed a petition begging the united states to take action against appraisal fraud. we found in investigations that wamu, washington mutual, had a black list of appraisers and you got on the black list if you refused to inflate the appraisal. now, think about that. there is no reason why an honest banker would ever inflate an appraisal. and that happened routinely and evidence shows that over 75% of

appraisers were subjected to coercive actions always to inflate the appraisal and that this came from the lenders. and note that it doesn't take 100% of the appraisers to go bad for fraud to become endemic because you simply use the 7% of appraisers who are happy to inflate the appraisal. you send them all the business. and same thing happened in the credit ratings where you had this absurdity of aaa ratings for things that weren't even single c. so, this is 20 plus raid inflation that happened absolutely routinely over 22,000 times in connection with the toxic waste. it is not true that 95% of the time, if you leave people alone, they will do the right thing. if cheaters prosper, then it creates what we call a dynamic

in which bad ethics drives good ethics out of the marketplace. >> ed, i want you to respond to that. >> when you look at the microevidence, you will find cheating. i agree, that's the way the world works. look what happened to you as real estate prices relative to europe. they did not rise, so, they were actually empower and germany integrated eastern germany and japan was suffering a big real estate boom, so those economies differ from the rest but our real estate prices didn't rise more than them. appraisers who were making inappropriate appraisals, but did that drive our real estate markets up to the level? i don't see the macroevidence to say it was emdemic. >> let me give you the macro evidence. studies found that 90% of stated income low-documentation loans involve fraud. investigations determine that these are almost invariably produced by the lenders and

their agents. how many of these low documentation loans were there? by 2006, it's roughly half of all the loans made in the united states. you're talking about millions of fraudulent loans and they drove the hyperinflation out of the bubble in the united states. >> we would have seen -- >> but, this question about, there's also the question about whether there's a lot of fraud in other places, as well. i don't want to necessarily -- i mean, having read into the spanish real estate bubble, which was massive and, in some some ways does look like ours, seems like possibly a tremendous amount of fraud happening in spain, as well. >> and in ireland. >> but, can we go back to this compensation question to me because that is really kind of at the core of this, is that my theory on this, and i would like to get your thoughts on this, is that like, you know, everybody's

got a price and the larger the absolute payouts, the more likely it is that price to find you. somebody comes to you and you do this thing that is kind of dodgy and here's $5,000. here's $500,000. well, all the good i could do with the $5 million. i could donate it to enterprises -- >> exactly the opposite in my theory. and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com.

[ humming ] [ male announcer ] kraft macaroni & cheese. you know you love it. cleaning better, doesn't have to take longer. i'm done. i'm going to... drink this... on the porch! ♪ give me just a little more time ♪ [ female announcer ] mops can be a hassle, but swiffer wetjet's spray cleaner and absorbent pads can clean better in half the time so you don't miss a thing. swiffer. better clean in half the time. or your money back. and for dry messes big and small try swiffer sweeper vac. and for dry messes big and small ♪

atmix of energies.ve the world needs a broader that's why we're supplying natural gas to generate cleaner electricity... that has around 50% fewer co2 emissions than coal. and it's also why, with our partner in brazil, shell is producing ethanol - a biofuel made from renewable sugarcane. >>a minute, mom! let's broaden the world's energy mix. let's go.

so, ed, i want you to respond to this idea, when the payouts get big enough and i think the sort of the payouts operate on different people in different ways. here's, there's, there's this interesting combination of status seeking because the number, it's like at a certain point, you know, people, my bonus can be $10 billion, 15 million how many more yachts am i going to buy, the status. the number that you walk around

with. i'm an a plus student, basically. then there is this, on the other side, it's trying to kind of cover your track physical you screwed up. this is the jpmorgan chase sec filing about their own estimated of earnings and traders that made this trade expect to mark their positions where they can execute in the market and recently discovered information raises questions about the trader marks. they were, they didn't want their losses to be exposed so as certain individuals would show the full amount of losses and you disagree with this sort of picture of motivation i'm painting. >> i think the circumstances matter. the people's careers are a lot more valuable than their yearly payout. if you want to somebody and said i'd pay you $5 million, might you be able to motivate them? i think you find the people making $5 million a year were making $5 million last year and the year before and the year before.

they worked hard to get all as and work their way into their positions and they look forward to the future and they see payouts and they're very careful about jeopardizing all they have worked for and all that comes next. so, they're less motivated and when you get to those levels, there is high, high, high visibility. >> when you talk below those levels. like more so with mortgage and mortgage brokers and these types of things where all of a sudden they're making $60,000, $80,000, $100,000 that was kind of big money. seemed to be almost endemic the amount of unsustainable mortgage being put forward. if you know you have career making millions of dollars for years. >> i even disagree with the millions of dollars a year the behavior of traders is that if you start to lose money in your book, you go for broke. the bermuda trade. you double down and pull yourself out of the hole and you make a great bonus and in your pocket, a one-way ticket to

bermuda or brazil and a lot can go off and form hedge funds because they made a name for themselves as great risk takers. i actually don't think it ruins your career, at least if you're a trader and you blow up. >> you have to be very careful about the bermuda trade because when people do lose money -- >> it's amazing that is a thing. >> a lot of supervision in banks for this very thing because we know when people lose money, they will double down trying to save themselves. >> i want to get bill to respond to this, we should make the distinction between bad risk undertaken not fraudulently, just bad management of risk. doubling down on a bad trade and being deceptive and calling the person submitting your libor bid. >> you usually do have to hide it. most of these traders that blow up, are also hiding their numbers. >> bill, i want you to respond. >> okay, we don't have to guess about these things.

a whole field called criminology that has researched this for years. so, first, it isn't just the dollar amount, it's the fact that you get it early. so, modern executive compensation is perverse and everybody agrees with it. second, it's large, but, three, it's sure. this is the nobel laureate and the 1993 article, looting the economic underworld of bankruptcy for profit where he emphasizes the great thing about account aing fraud is it's a sure thing. and the fourth thing is it's the opposite. you lose your job if you refuse to engage in the fraud. so, the average cfo in america has a tenure of three years. now, that's all kind of problems to begin with, you're never going to get a long-term perspective out of that. >> yeah, hold that thought right there, hold that thought, bill.

we'll keep you on the line and we'll come back. i want to keep talking about this. we'll get right back into it after this break. [ male announcer ] it's simple physics... a body at rest tends to stay at rest... while a body in motion tends to stay in motion.

staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. plus, in clinical studies, celebrex is proven to improve daily physical function so moving is easier. celebrex can be taken with or without food. and it's not a narcotic. you and your doctor should balance the benefits with the risks. all prescription nsaids, like celebrex, ibuprofen, naproxen, and meloxicam have the same cardiovascular warning. they all may increase the chance of heart attack or stroke, which can lead to death. this chance increases if you have heart disease or risk factors such as high blood pressure or when nsaids are taken for long periods. nsaids, including celebrex, increase the chance of serious skin or allergic reactions or stomach and intestine problems, such as bleeding and ulcers, which can occur without warning and may cause death. patients also taking aspirin and the elderly

are at increased risk for stomach bleeding and ulcers. do not take celebrex if you've had an asthma attack, hives, or other allergies to aspirin, nsaids or sulfonamides. get help right away if you have swelling of the face or throat, or trouble breathing. tell your doctor your medical history and find an arthritis treatment for you. visit celebrex.com and ask your doctor about celebrex. for a body in motion. visit celebrex.com and ask your doctor about celebrex. i feel likeo having that's normal. if you are not feeling like trying this on, that's not normal. activia helps with occasional irregularity when eaten 3 times a day. feeling regular to me was a new feeling... activia your mouth has sipped, snacked, ...yellowed... giggled, snuggled, ...yellowed... chatted, chewed, ...yellowed. and over all those years, your teeth...have yellowed. fact is, if you're not whitening, you're yellowing. crest 3d white whitestrips remove over ten years of stains by going below the enamel surface.

and, they whiten 25 times better than a leading whitening toothpaste. crest whitestrips. life opens up when you do. hello from new york, i'm chris hayes here with deedric muhammed and edward conner from bain capital, alexa goldsteen and now a member of "occupy wall street" and stephen carter, law professor at yale and joining us is bill black. we're talking about the week that we've seen on wall street, just in a week of wells fargo settlement of racially bias practices that cost black and latino borrowers money and we have seen more come out of the

libor scandal and near our "times" piece in the paper today looking to build a criminal case around it. paragreem looks like a mini madoff situation in which a guy stole $100 million of his client's money and what the culture or finance is and whether or not it's systematically driven towards corner cutting. stephen, something you want to say. >> well, sprouppose it's true at finance. that's something that is true in american life. seems endemic to the kind of things that we do and the kind of practices you refer to, pushing people into subprime loan is a terrible thing to do. on the other hand, begins from the same faulty notion that everybody's biggest asset should be their house and you need to

maximize your consumption. buy more stuff and get more stuff where you'll never be happy. you see the same pressure on both ends. the greater damage when you see it happening sometimes at the top. >> your indictment is that the entire culture is corrupt. >> it's not that corruption is the wrong word, that we have a culture that encourages constant consumption and i'm talking about desire like i want to buy that thing and if you're going to have that culture, people are going to find ways to cut corners to get the things that they want. >> the only thing, you can focus on the good or the bad and everything has costs and benefits. if you look at the united states. we add aed $40 million on the base of 140 million employees. europe and japan grew half as fast. we increased our productivity while theirs fell. we created, we brought 20 million immigrants and pulled them into our country and we educated their children and put tens to millions of people to

work off shore. when you step back and look at the mackerel level and with all the cost cutting and all the things that have occurred our working class incomes have grown twice as fast as theirs. on a per person basis, but total basis and total number of employees. we have put 40 million people to work and they're less -- >> between europe and japan. >> the two other high-wage economies that are the real-world examples. >> in terms of job creation, if we look at the last decade and the decade that this stuff is happening, the decade in which traders in the london office of barclays were calling up the people submitting their lbids. >> lowest unemployment -- >> until a financial crisis. that's like saying i was perfectly healthy until i was cancer stricken.

>> the cancer that you're describing is caused by a massive withdrawal. >> this is a bank run, had nothing to do with anything that was happening in the run up to it. >> we will have high unemployment and slow growth, exactly as we have now when the money isn't circulating. instead of the bankers doing illegal things and we focus on the corner cutting and not the things that are beneficial. we end up with $1 trillion in the banking system and $2 trillion -- >> here's my theory for why it's undeployed. if i knew, if i was one of those people surveyed that said 40% of my competitors will do illegal or unethical things to get ahead, my compensation structure incents haves illegal behavior and knew the traders on the desk. >> you would have done that in 2007 -- >> but now that i've seen it all blown up, i would not trust the system and i would silt on my money as i as a personal

individual are doing right now because i don't trust the system because fundamentally the system seems untrustworthy. >> people think the game is rigged and nobody is investing and we're in a climate of fear and it's got nothing to do with, you know, it has everything to do with the fact that we see this massive corruption and no one charge the system any more. >> we used to be that implicit governors hold all the short-term debt in place and we woke up in 2009 and recognize that they don't work and an enormous risk of damage from withdrawal and we have to hold money aside to fund those withdrawals in the event of another case. if it's sitting on the sidelines. it's not funding your houses and your businesses and not creating employment and business and growth. >> let me explain this in lay terms and then i want to get bill black in here. the idea between the fdic and the insurance in the wake of the bank that precipitated, that that bank run was, we never

wanted to have one of those, again. federal deposit insurance corp was set up to ensure people's accounts so in the midst of a panic people wouldn't run to their banks. banks have liabilities in excess to reserves and they lent out more money than they have. that's the purpose of a bank. everyone goes to get the bank at the same time and the bank will then be bankrupt. so, we guarantee it. what you're saying something like that happened in the short-term funding market, which is there is a whole bunch of complicated ways you can explain what it looks like, but, essentially, a run on the banks and we need something like, not necessarily fdic, but what is happening in the short-term lending market. >> what happened is all these banks were repoing out. i have all of these assets and all mortgage-backed securities and i'm using those to fund my payrolls and pay my day-to-day bills and i go to the repo market overnight and say i'll loan this to you overnight and in the next day instead of buying it back, i just

renegotiate the terms of the deal when everyone realize all these aaa ratings weren't worth anything. all of a sudden the markets froze up. the fact that all these banks are doing all their payroll and everything else based on short-term lending is a terrible model. that is the reason that everything fell so hard and so fast. >> this is what banks do, they put the short-term money to work. >> the repo market. >> they put the -- >> bill, bill, bill, i want you to respond to this sort of, the degree to which we can sort of untether what happened in the crisis from the run to the ball. i think the most, in some sense, novel and provocative thesis in your book is precisely that. distinguishing the real estate market and the way the credit mark ats look and the mortgage bubble and all those things in the run up to the crisis from the krisitousself and you detaching those two things. >> the run up before the crisis looks a lot like the rest of the world. >> bill, i want you to respond

to that. >> the rest of the world whhas whole lot of fraud. so, you can't assume that the rest of the world doesn't have fraud. look, it's really bad for an economy to have this kind of fraud. if you allow aggressions dynamic to exist, if cheaters prosper, then we have known for centuries, swift talks about this, of all things that you're going to have fraud become predominant and you get crony capitalism and you get weak growth. so, enforcing the laws against fraud and preventing the crimnuogenic environment in the first place is a really good thing for an economy. how do you do that? first, you stop executive compensation and professional compensation from being set up in theperverse way they are now. second, you get rid of the three ds. deregulation, desuperalivation.

the death of accountability. acerlof and romer say when you deregulated the savings and loan industry what we failed to understand was that this was bound to produce wide-spread loo looting. they said, now we know better. if we have an economic theory, we don't have to have these crises. we did the opposite. we deregulated and we failed to prosecute out of the savings and loan crisis, we did over 1,000 felony convictions in major cases in the current crisis of the folks who drove it on wall street, we have zero. and, so, yes -- >> some of the deregulation made the crisis worse. the 2005 changes that made derivatives debt senior if a company goes bankrupt, all assets get frozen, except for derivatives. they are exempt. so, when everything gets frozen

derivatives and counterparties get to pull all their money out first and that's what happened in the wake of the crisis is that everyone freaked out because they knew that was the case after the 2005 changes. >> i'm going to thank bill black professor -- sorry, bill, we have to go. thank you for coming on. and alexis goldsteen, former information technologist at merrill lynch, thank you for joining us. we really appreciate it. mitt romney said he left bain capital in 1999. we'll have more right after this. [ male announcer ] wouldn't it be cool if we took the nissan altima and reimagined nearly everything in it? gave it greater horsepower and best in class 38 mpg highway... ...advanced headlights... ...and zero gravity seats? yeah, that would be cool. ♪ introducing the completely reimagined nissan altima. it's our most innovative altima ever. nissan. innovation that excites.

♪

is now in our new starbucks refreshers™ -- a breakthrough in natural energy. made with real fruit, starbucks refreshers™ are delicious low calorie drinks you can feel good about. ♪ rethink how you re-energize. ♪ get a boost of natural energy with a new starbucks refreshers™, in three ways. natural energy from green coffee extract, only from starbucks.

president obama hammered away at mitt romney's record after new evidence suggested that romney may have remained at the firm longer than he's

previously stated. a rath of new documents by "the boston globe" and current tv indicate romney held the title of chairman and executive of bain capital until 2002 despite claims by romney that he left the firm in 1999 to run the olympics in salt lake city. on this document, romney has listed as chief officer and list his principal occupation as managing director. sending their jobs overseas during the period in question. president obama hit romney on the outsourcing claims yesterday in virginia. >> let's stop giving tax breaks to companies that are shipping jobs overseas. let's give tax breaks to companies that are investing right here in the united states of america. mr. romney's got a different idea. oh, he invested in companies

that have been called pioneers of outsourcing. i don't want to pioneer in outsourcing. i want some insourcing. >> despite the new documents, in a series of interviews with five different networks on friday, he was no longer involved with bain operations in 199. here's romney on nbc. >> in february of 1999, i left bain capital and left all management authority and responsibility for the firm. i had no ongoing activity or involvement in the affairs of bain capital because i went out to run the olympics. i don't recall a single meeting or single participation in an investment decision by bain or personnel decision. >> this despite romney's own testimony from 2002 that he attended board meetings such as staples during the period in question. want to welcome back to the

table, victoria and alyona, host of alona show. all right, ed, we are confused. america is confused. if -- if mitt romney was not running bain in 1999 to 2002, who was running bain? why doesn't that person come forward and say, i was running bain? >> trying to transmission mitt to a new structure. he announced he was going to leave to run the olympics and it was in fairly short order and mitt's names were on the documents as the chief executive and it took several years for us to sort out how to put the management team in place and there was a management team in place already and we had to negotiate with mitt because he would create a lot of franchise valla and we'd pay him for that. we had to recognize that other partners would leave over time. whatever we did for him was going to be reflected in what everyone else and we had a

complicated set of negotiations that took about two years to unwind. during that time a management committee ran the firm and we could hardly get mitt to come back to negotiate the terms of his departure because he was working on the olympics. >> this is interesting. the reason that the three years happened, he is the chief executive officer during this period of time. >> legally on documents, i suppose, yes. but he has no, he's not attending any meetings. >> no meetings at all. he never showed up at any meetings. >> it was ten years ago, can i remember every single meeting? >> no. >> we had a management team and, in fact, everybody's departure at that time and it was difficult to get any time for mitt. >> presumably documents that bain has. >> but there's an offering memorandum all investors had

recognized that mitt had gone off to the olympics and wasn't involved. >> the question is, why didn't he own it? right now we're dealing with the technicalities of it. people don't like technicalities. but early on he should have said he left in 1999 but my name stayed on there because of these issues. but he didn't say that. right now it's coming up to haunt him that he wasn't clear about it early on. >> my question is, again, to me, i'm not a big wall street person in any way. if my name is down as ceo whether i'm being actively involved in management a lot of money to a lot of americans, doesn't he have to be held responsible? his name is still down. management team doing it but he still needs to take responsibility for what is happening at bain during that time period. >> doesn't everyone else find it incredible that mitt romney would have thought this through. this is not his first campaign

and you would think that you would be able to address these things. you would -- >> i don't think there's any question in mitt's mind -- i don't think there's any question in my mind -- >> this is the weirdest thing to me. the name is on the document, also, why are you paying him $100,000 a year. i understand in the structure of mitt romney's compensation, that's essentially a tip. >> created the firm, no, mitt created the firm and enormous franchise value and their contribution to the value to the firm, when mitt left, oh, see you later, you don't get another dime from the firm. you created something incredibly valuable and you need to be compensated for that. >> that's different than the $100,000. >> you are focusing on the wrong stuff when you think of $100,000. he has a lot of things in the firm but not running the firm like a limited partner. >> let me ask you this, i mean, $100,000 is still -- he's still

being paid and he still has his name on it. if, let's say, my understanding of bain during mitt romney's tenure is there were certain things bain would not invest in because of mitt romney's own faith and world view. things like alcohol, for instance. did those bright lines go away in 199. deals made once he was running the olympics that would have violated this kind of code that he had, which i find quited amirable, actually, that changed after he was running the olympics? >> i don't recall before or after. i think we all looked at evidence and said, hey, we have endowments and pension funds and people in our investments who might not want to assume things like gambling, for example. to this day y don't thi, i don'e are a lot of those investments in the portfolio. which doesn't mean we could find some example here or there, but a general feeling, not just in our firm, but in many firms to

shy away from investments. >> when you say this was taking a long time, what was the -- it sounds like he was driving a hard bargain. is that the issue? >> yes, of course. >> because, why? because he -- what was at issue? what were the negotiations? i don't understand what the negotiations were that created three years. >> i created an invaluable firm that is making all you guys rich. that is the negotiation and now the next person says, whatever you do for him -- >> doesn't he have ownership stake anyway. doesn't he have an ownership stake that that value will increase anyway. >> you have to decide when you're no longer involved in the firm what would then be the economics for somebody who had really created enormous franchise value like he had. when you address those issues, you have to turn to other people who say i create a franchise value, too. what about me, what about me? all partners want to get involved in the negotiation of quha what it means for him and means something for me, too. >> he's the first one to leave after this thing had been

created and the negotiation for him is going to create the bu h benchmark for the compensation structure. let's talk more about this and also what's at issue here. you have some words in your book right after we take this break. ♪

[ male announcer ] you've reached the age where you don't back down from a challenge. this is the age of knowing how to make things happen. so, why let erectile dysfunction get in your way? talk to your doctor about viagra. 20 million men already have. ask your doctor if your heart is healthy enough for sex. do not take viagra if you take nitrates for chest pain; it may cause an unsafe drop in blood pressure. side effects include headache, flushing, upset stomach, and abnormal vision. to avoid long-term injury, seek immediate medical help

for an erection lasting more than four hours. stop taking viagra and call your doctor right away if you experience a sudden decrease or loss in vision or hearing. this is the age of taking action. viagra. talk to your doctor. we're talking about the, somewhat mysterious and baffling tenure of mitt romney between 1999 and 2002 at bain capital. ed was at bain capital. so, he was legally ceo. just two more things and then i want to move to kind of like a bigger discussion about offshoring and outsourcing. presumably, if he was hard to reach, as you just said before, because people were trying to reach him. people were trying to reach him. there was some business doings he was doing with the firm. >> he was negotiating with the firm, yes. >> but only negotiating, no management business he was

doing. >> i never saw him. and i was in management meetings making investment decisions and he was never there. >> do you think bain should release documents establishing this. i feel like i learned more from you, the salary negotiation makes the thing make more sense. >> i don't know what documents they would have to release. i'm sure they looked that documents and said the off aering memrendm when they went out to raise fund, oh, mitt's coming back, don't worry about it, he will come back and manage the money. that wasn't said. >> i think this will die down. it is july, the dog days of summer and we're all looking for something to analyze, but i think it is a technicality. he wasn't there in the day-to-day, but he was there on paper. he should have taken his name off. >> it does speak to this idea that somehow mitt romney is unrelatable to the average person. the average person you can be president, ceo, get compensation and then say i have no responsibility for what the

company has done. >> let me also say this, reputationally, we were talking in the first block about reputation. he was the ceo. if bain did something, decided to do something even if he was in the midst of working these crazy days in utah and bain decided to do something that was reputationably massively damage aing or incredibly foolish or unwise one presums mitt romney could have come back and said, hey, guys, don't do this. we decided that the future is the hula hoop and we're going all in on a hula hoop investment and he could fly back to boston and be like, no, that is a bad idea. >> you have to presume he was aware of it. >> he's aware of his money. >> i would hope so, right. but, can i ask one more question, too. you think all of this will die down because we're in the middle of summer right now? will it, though?

if the question is here over a candidate's credibility and right now people are trying to evaluate whether they believe in mitt romney and whether he might offer the right policies and move the country forward, as everyone likes to say. we got used to politicians lying maybe once they're in office and now we caught him in a lie -- >> we haven't caught him in a lie. >> come up with a message and a way to explain it, then it's dishonest. >> all the paperwork forward than there is. >> i think my name was on it and i probably should have been -- >> might not like that. >> now the media reports have come out. >> can i ask this, the reason that -- >> this is all really diversion, by the way. >> a diversion from whether or not people actually want to trust this candidate. >> diversion about whether or not you want 8% unemployment. >> no, it's not quite that micro

and not that macro. obama campaign hit him on a deal that bain did. the factory in kansas city, missouri, they shut down the plant and the jobs moved offshore. >> they were not moved offshore. >> the whole steel industry moved offshore but we didn't open up a plan offshore. >> the steel company is shut down and the obama campaign runs an ad about this and mitt romney's response. here is him responding to the closing of the steel factor. >> they said, oh, gosh, governor romney at bain capital closed down a steel factory. but their problem, of course, is that the steel factory closed down two years after i left bain capital. i was no longer there. so, that's hardly something which is on my watch. >> here's what i think is so strange about this. the romney campaign is essentially saying there is this big distinction, the behavior of

bain pre-1999 and post-1999, if i was there. we would never close down a steel factory and it just seems insane to me that that is the case. you guys are basically doing the same thing in 1998 and 1999 and 2000 and 2001. isn't that true? >> well, i believe that's true, yes. i believe that bain capital does what bain capital does which is make the company stronger and grow them faster. >> if the deal doesn't work out and the plant closes down whether that happens in '96, '98, 2004 or 2008. this is the way the business works. >> i believe these attacks on bain and mitt are attacks on business generally. they're trying to pit employees against employers, of course they are. they want to pretend the customer doesn't matter. the company decides which company to buy from and which factory to buy from and how much they're willing to pay for products. we as investors and employees have to respond to those demands. >> doesn't it drive you crazy that he just won't defend what

bain is doing? what is he ashamed of? this is what bain did. we know what private equity does and a huge debate partly because of this campaign and partly because of this book and private equity is good for capitalism and destructive or not. why be ashamed and why be defensive about a single plant that closed and happen to happen two years after you were running a day-to-day. look, this is how it works. >> you say ashamed and i see great pride. >> but he doesn't see great pride. >> bash romney over the head about bain, yet he will turn around and say we need to extend our economy and globalize and realize there are emerging markets. why doesn't romney own it? if he owns it, he is in line with what the president -- >> i want romney to read from your book is what i want him to do because you own it. >> i believe the following is this. when the debate really starts in august, september and october, we'll see.

i think he'll own it. when you're here in the dog days of summer with a lot of distraction by the obama administration who, by the way, can spend all their primary money when mitt spent his primary money when he doesn't have the ads that really matter. he can try to make his case in july when nobody is listening or he can wait, hold his fire and make his case in september, october, november, i believe he has to make thiz case. >> i will talk about the case actually for offshoring, right? for moving jobs out of high-wage market like the u.s. into low-wage markets right after we take this break. [ man ] ever year, sophia and i use the points we earn with our citi thankyou card for a relaxing vacation. ♪ sometimes, we go for a ride in the park. maybe do a little sightseeing.

or, get some fresh air. but this summer, we used our thank youpoints to just hang out with a few friends in london. [ male announcer ] the citi thankyou visa card. redeem the points you've earned to travel with no restrictions. rewarding you, every step of the way.

redeem the points you've earned to travel with no restrictions. this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. so, the center of this is about a debate about long-term trends in american capitalism, manufacturing jobs which have been sharp decline in the u.s. and a lot of the manufacturing has moved to places specifically in most famously china, where it's much cheaper to pay people.

and, the idea, i mean, the subtext in all of this when mitt romney is being attacked by the obama campaign for investing in this practice at bain capital or for overseeing this practice at bain catal, this thing is a bad thing. that's why it's an attack. but it just seems to me that it cannot possibly be the case that mitt romney thinks it's a bad thing because most people who work in private equity. most people in capital finance capitalism see it as a positive. you write in your book, the very stirring defense of offshore labor. let's not kid ourselves about how offshore labor really is. if these workers immigrated here. we don't pay for their medical experiences when they show up in the emergency room and we don't pay for their unemployment benefits and their wear and tear on our public infrastructure and

drunk driving, drug use and other crimes. it's clean-costs neither the employees or employers are here to vote and seek political handouts. this sounds like you think, yes, this is beneficial for people. >> i think the problem with defending it, for mitt, i'm not speaking for mitt. >> you're speaking for yourself. >> people look very close to the paper and say, ah-ha there is a job that went overseas and we can speak about bain. 20 million immigrants came into our country, net insourcing, not net outsourcing. we were growing the economy fast enough that we were pulling the employees into the country. >> the jobs are different, though, the jobs that are going out are different of the folks coming in. >> 50% of the 40 million jobs created 40% were created at the highest end of the wage gap. so, there was a disproportionate increase at the high end of the wage scale over that, over that

period. >> that i believe. but the point is that, there is a case that this is, that it's rational and, indeed, beneficial to move these kind of jobs out of this country. >> just a few more things. 85%, prior to 2000, 85% of the manufacturing jobs lost were lost at domestic productivity gains. two-thirds were lost, so, there's a lot of offshoring that might have occurred. i was the head of the manufacturing practice at bain. there were lousy investments if you take stuff over to china. the value is gone and it's a lousy commodity product and you're making it in high volume. that's not where successful u.s. business is going in the future. >> where are they going? they're going to much more complicated and local services for starters and much more complicated intellectual property. that has relative to europe and

japan in the rest of our economy which has moved into the local service economy. doctors, nurses, teachers, truck drivers whose wages have been more insulated, if you will, from foreign compensation. >> but the politics of this is that you should not be closing down jobs and shipping them overseas and what's bizarre about this debate is that people are both sides and, i mean, democratic politicians and democratic policy has overseen a lot of outsourcing and nafta, obviously, did a lot of that. textile industry and moved across the border to mexico. there is this debate being had about the issue which, i don't even think, i'm not even sure the democratic party thinks it's a bad thing. >> they don't, though, if you look at what the president is doing right now. he's by no means a champion for the american worker. and, if you look at a, for example, this transpacific partnership agreements being negotiated with eight or nine

different countries behind closed doors. at the end of the day, this could be the largest trade deal in u.s. history. some labor unions that have come out and taken a stance against it, it will hurt american labor but for the most part, we give back to this issue that the labor unions will vote for the president anyway. they're not making as big of a fuss as they should where they support in the exact same pol y policies as republicans do. >> it is this love/hate relationship we have here in america and we don't want immigrants and we don't want offshoring and pay $10 for a head of lettuce and we don't want to pay $50 for a t-shirt at the gap. we see these arguments and this big argument about the uniforms for the olympics being made in china. i mean, there is this outrage of it, but when you go to the store and you want to buy just some sweatpants and a t-shirt, you don't want to pay the $50. you want to buy the ones that were made at china. so, at the microlevel we're fine at that, but at the thelogical

level, the theory level, that's where we get the pushback. >> the working class do feel they have been stretched and not that the 1% are benefiting greatly and that they are suffering. so, i mean, you were talking about the micro versus macro, there is a larger picture of how the larger class and working class are not feeling like they are able to keep up and move forwardp. >> the numbers are there. >> middle class stagnation and frustration about the economic circumstances is what's underlying all of this. we'll talk about that after this break. ttd#: 1-800-345-2550 let's talk about market volatility. ttd#: 1-800-345-2550 in times like these, it can be tough to know which ttd#: 1-800-345-2550 way the wind is blowing. ttd#: 1-800-345-2550 at charles schwab, we're ready with objective insights about ttd#: 1-800-345-2550 the present market and economic conditions. ttd#: 1-800-345-2550 and can help turn those insights into ttd#: 1-800-345-2550 a plan of action that's right for you. ttd#: 1-800-345-2550 so don't let the current situation take you off course. ttd#: 1-800-345-2550 talk to chuck. ttd#: 1-800-345-2550

stag nalting wages for the middle class and a sense of more powerful than even the economics is the emotional sense of horizons that is kind of the dominant mood in the wake of the great recession and the crash at a time of 8% unemployment and that seems to me what is going to define this election, more

than anything. and i think part of it, also, though, is the sensation that the game is fixed, the rules aren't square. it's not on the level and people feel like, you know, on the tax return issue, for instance, it's like, what the world that mitt romney is operating in is a very different world than i'm operating in. i look at my tax returns and, you know, there's not all this complexity and cayman islands and offshore accounts and whatever. what is that world? it seems to me part of what has happened in the campaign is that mitt romney has become a kind of stand in for a lot of frustration with american inequality. do you think that's sort of what happened? >> i think the obama administration has been able to define it that way. i think a lot comes with frustration with growth. we want faster growth and higher wages. the question is, what policies will create that? are those government-driven policy as and i think we have a

choice in this election on that. >> do you really think -- i think that always ends up being the choice. if you look at the last time republicans ran everything, yet a republican congress, the percentage of gdp grew. >> grew a lot more afterwards, but, yes. >> it grew during that period. they didn't do any shrinking. just unclear to me that, actually, the stakes always get defined in these ideological ways. you wrote a book about a certain ideology and a certain set of principals. this is a choice between the ideology and principals. when you dig underneath, no actual evidence to suggest that there's going to be some huge difference in the percentage of gdp under democrats and republicans -- >> it's not that cut and dry. >> who it is going to benefit. >> interestingly enough, this rise in debt is going to be tacked on to the tax argument. so, you know, the president wanting to let the bush tax cuts expire, except for those making

under $250,000. if i had a crystal ball, i would say that the republicans are just going to say, nope, it's about the debt relief. and, so, you get americans thinking, not so much about the taxes, but about the debt. look at the spend thrift government. all they do is spend, spend, spend. and that gets people very angry and you take that emphasis off of the tax, off of the individual level and you put it on the debt and that's where it comes back and the republicans have a much stronger argument. >> that's the one they're making. >> the republican support, they support government spending just as much as democrats do, but they like to hide it by national security and, i mean, when it comes to defense, this is where, the republicans are the number one proponents of massive government spending. >> i just think there's that much evidence that there's that big of difference. >> government spending rose in 20% to gdp to 24%, 25% government spending. >> under obama. >> in the wake of the recession. it rose across the world. i want to thank ed conner, the

former partner at bain capital and you have been told about the economy is wrong. we didn't even get to marginal tax rates. what you should know this week, right after this. [ male announcer ] research suggests the health of our cells plays a key role throughout our entire lives. ♪ one a day men's 50+ is a complete multi-vitamin designed for men's health concerns as we age. ♪ it has more of seven antioxidants to support cell health. that's one a day men's 50+ healthy advantage.

what we should know for the week ahead. plus, my book is on sale now at online retailers in your local bookstore. i'll be appearing here in the common new york. check out our website for more details about other upcoming appearances. what do you need to know for the week coming up? how common places corner cutting is on wall street. a quarter of wall street workers believed unethical worker could

help people and the knowledge of wrongdoing in the workplace. 30% said their compensation structure created standards to violate the law or commit insider trading if they believed they could get away with t it's hard to develop a system without monetary rewards for cheating. speaking of ethical breaches, a separate study shows the united states has slipped in the ranking of least corrupt countries from 16th place in 2001 to 24th place in 2011. the u.s. is falling behind most other developed nations and the u.s. department of agriculture has named 1,000 kournt teas natural disaster areas.

this is the largest such designation in the program's history. congress will most certainly pass a farm bill this year, it is doing nothing to mitigate the climate effects. it's not going to account for very much if republicans get the future that they seem to want. the party that ruled mexico for 71 years, the pri, appears to have regained power. the challenger has filed a formal complaint to anull enrickque and pri has a long history of corrupt buying and vote buying. a recent poll shows that 40% didn't think that the election was clean. what do you think people should know this week? >> what i would like people to know is to look at the legacy

and life of a national board member who passed away. he had a long history of activism and i think like most americans the -- what we contribute most in life is what we don't get a paycheck for but his type of activism what it is today and died with that type of activism. >> wonderful. all right. pete. steven carter? >> what people should know this week is with all of the scandal at penn state involving joe paterno and so on, we saw a similar scandal with much less attention in montana football team as well. it's merely the tip of the iceberg. wherever you have enormous power concentrated with people surrounded by lots and lots of ak al co-lights and lots of

followers. >> i think there's been an interesting conversation that's been opened up about college sports in the last year. >> it's not just sports. in all the areas of life where we tend to elevate people high and a lot of people's living depends on keeping them at the high elevation, that's where we're going to mention it. >> victoria? >> i want to talk about the drought. we have seen a fall in these crops which means increases in grain prices. so what does this mean? you have a decrease in crops, you have people going hungry, economic instability which leads to political instability. down the road, thinking about that connection of food and security. >> alyona? >> you mentioned the transportation support. that were taken into trying to

find a way to prosecute wikileaks. they are very political poll rising figures but overall everyone should pay attention to the way that they are trying to use the espionage act. >> yeah, i saw the posting. it was pretty -- >> cryptic? >> i want to thank my guests, stephen carter from yale university, your new book -- glt i am beachment of abraham lincoln. it's a courtroom thriller. >> check that out. victoria defrancesco and alyona minkovski. coming up next is melissa harris perry. she has a few things to say

about the remarks from the naacp. that's next coming up. see you next here on "up." ♪ ♪ i want to go ♪ i want to win [ breathes deeply ] ♪ this is where the dream begins ♪ ♪ i want to grow ♪ i want to try ♪ i can almost touch the sky [ male announcer ] even the planet has an olympic dream. dow is proud to support that dream by helping provide greener, more sustainable solutions from the olympic village to the stadium. solutionism. the new optimism.™ ♪ this dream

his morning starts with arthritis pain. and two pills. afternoon's overhaul starts with more pain. more pills. triple checking hydraulics. the evening brings more pain.