like millions of americans i've lost thousands of dollars in retirement funds and i haven't had as bad as many it's not just about the fish it's about me to. me man bing ya gotta share. some. myths am. at g.'s. needed. but now she. says this is my film i get the last word this financial crisis will not be turned off like a light switch. wealthy british style. time to.

market why not. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune in to cause a report on our. line. soon which brightened if you need soon from funds to christians. whose friends don't totty don't come.

welcome back you're watching live from moscow a reminder of the top stories the chechen parliament terror attack was a demonstration to acquire that russia's north caucasus has a new militant leader jostling for power according to aspirants the raid was attempted by a group of militants on tuesday morning and left three people dead and seventeen injured. the russian french and german leaders agree that nato and russia should face their challenges together a meeting in the french resort of devilled president medvedev says he'll attend next month's nato summit in lisbon. and the u.k. has announced cuts to its defense budget worth almost five billion dollars which will be to a delay in the renewal of the country's nuclear deterrence and see military jobs slashed follow similar calls from germany and france and has caused washington to worry over dados capabilities when next it's our special report availing the link

between the financial crisis and criminal activity and also how the housing market's collapse sparked the world economic meltdown. thank you we're going to leave the car and we're going to do a picket line around his house ok. let me let it go into. a relative i want to. talk. to the few smart. you want to make their bread what they're preparing.

for many. we say we live in the capitalist pig society but the bad mood. capitalism is our way of life the market system its highest expression our media hypes it in quasi religious terms even if its impact is sometimes quite negative

and even debated in classrooms can't we agree if capitalism is an economic system a system for the production and distribution of things we need one i want to treat that not ok you think something about government too there have to be a legal basis for an economic system to operate. most of us recognize we live in an inherently volatile system problem free but so the conventional wisdom goes better than any alternative many still believe the free market is our salvation even as our economy has crashed brought down to not just by greed but calculated scams in schemes the flow out of the intent of our laws in ridged a few and devastated the economy leading to a massive loss of jobs homes and personal wealth.

leads us in two thousand and six my film in debt we trust warned of a coming economic collapse. the stock pick the next great economic crisis a special report of out by the debt load which it will create an economic crisis so deep that it threatens us i was called a doomer and they murder and a long list television. in the sixty's just written a little a book called plunder i followed up with a book that came out before lehman brothers went bankrupt speaking on wall street i called for a jail out not a bail out i used to think of wall street as a financial center i now think of it as a crime scene. nomi prins was a managing. partner of bear stearns and goldman sachs this is the most expensive take out the biggest crime in world history we're talking about

a crime we can't even quantify we're talking double digit trillions of dollars into this film we'll explore the scale of monies missing written off last ripped off in these various scams and in the case of the bailout funds unaccounted for. graydon carter editor of vanity fair may have summed it up best when he wrote it can fairly be said that the chain of catastrophic bets made over the past decade by a few hundred bankers me will turn out to be the greatest nonviolent crime against humanity in history they brought the world's economy to its knees last tens of millions of people their jobs and homes and trashed the retirement plans of a generation and they could drive an estimated two hundred million people worldwide into dire poverty in other words never before have so few nuns so much to

so many and when experts estimate the total money last may reach a hundred ninety six point seven trillion dollars and that could be low like millions of americans i've lost thousands of dollars in retirement funds and i haven't had as bad as many it's not just about them it's about me too i have a stake in it and like millions of angry about the way our economy whistle records . to help with our investigation we spoke with convicted white collar criminal sam and talk to white collar criminal husband because for his use documents we destroy documents you subpoena witnesses we walk so who are at a disadvantage at a cost that a white collar or it affects our economic creditors. to an investigative reporter on the business beat wall street steals far newer than the mafia says gary weiss

a wall street. takes a lot much larger sums of money to involve the mafia stales the regulatory system is such that they can get away with it the lack of media scrutiny the absence of regulation the widespread illusion that markets and real estate could only go up created a casino mentality and environment for successful fraudsters and white collar criminals yana for many years until my arrest on december eleven two thousand and eight i operated a ponzi scheme i knew what i was doing was wrong and criminal. white collar crime on wall street has been underreported except for a very few high profile cases as when hundreds of reporters staked out a new york courthouse to report bernie made off submission of guilt in his ponzi scheme and their millions and millions of dollars a. day many of them regularly angry i had an ira worth one point three million

my other money it's was about one point eight million pieces and it's gone on that how do you think you got away with this for so long now a person has run a stamp for so many years without that effect that was one of the things i thought of i hit scale nobody could successfully run a scam for that long. was not alone regulators are now investigating scores of similar crimes they say there is a ponzi monium under way this four levels and every white collar crime is the gotta gives the what is the people of the water the people that knew what was going on but didn't participate and the people that should have known what was going on like boards of directors or it is but they didn't participate so what they try to do is they tried. get to the culpability of the guy at the top by working from the bottom the problem that you have in the bernie madoff cases they got the guy at the top first and he's protecting the other three layers underneath that wall street

a lot of the extraction tends to be very borderline illegal because the people extracting tend to be the ones setting up the legal framework route economics is what limited not only calls it in our new book with the reason why the line between what is criminal what is now criminals disappear it's because a did it will exist when you remove all that is fiction when you remove all the controls then of course what this legal and want this illegal so you're creating a crime scene and you're creating the crime. you're. affectively by the police officers all at the same time only in the form of a regulatory body or a politician for the laws that work for wall street in june two thousand and nine the f.b.i. said it was investigating thirteen hundred securities fraud cases including many

ponzi schemes his will is more than five hundred eighty corporate fraud cases most of these cases got little attention but the media loves arch criminals like financier bernard madoff these are complicated white collar crimes of which the government does not have the resources to thoroughly prosecute and the white collar criminals know it so they set it up not as a single transaction that's a crime but a series of transaction that once that it's all put together makes it a crime but to do that you have to go beyond the prosecution of one wrongdoer and look at the way wall street itself became a ponzi scheme you have to examine a pattern a system of criminality which brought the investment and real estate worlds together in a multi-trillion dollar. scam. to simplify there were three interconnected rings in this circus involving the biggest firms in the industry it started in the real

estate business where our desire for homes the him her dream was turned into a scheme first predatory subprime lending over the years got people into mortgages they couldn't afford and that the lenders knew they couldn't sustain it was enabled by artificially low interest rates with financing provided by twenty five of the top banks in the country the second component of the crime involves what happened next when the biggest banks and investment houses on wall street bought and then securitized loans as structured financial products these mortgage bundles would be sold worldwide without full disclosure of their lack of underlying assets or the risks the banks that bought these derivative products failed to do due diligence relying on rating agencies that overvalued their worth and accounting firms that did not do their job the whole process was corrupt to the core.

finally the third level of this interconnected but decentralized criminal enterprise involved ensuring these often fraudulent practices in some cases betting against them by the very people who sold them to guarantee that they would be protected when borrowers who couldn't afford the loans defaulted they used insurance companies like ai g. . put these three criminal components together and a pattern emerges a pattern of financial crime. the financial crisis started because people could no longer afford to make payments on their subprime mortgage loan this is. a good strict. all of this from being foreclosed all of that you can see anyone under strict nobody moves in

nobody wants to rent the housing crisis hit america like a tsunami destroying neighborhoods and costing millions of families their homes the telephone. company. but close. to us. how did it happen why did so many top banks lend to some of the poorest members of society in a practice known as sub prime lending featuring loans like the one called need no income no jobs no assets apparently no problem the reason higher fees up front and billions more when mortgages were turned into securities resold by wall street. sixty percent of the subprime borrowers could have qualified the less costly prime rates but most were told their homes would go up in value many accepted onerous

terms to give their families a piece of the american dream. many old into believing they could afford houses with no money down and low introductory interest rates watched the cost of the just the bill rate mortgages or the arms shoot up when i first got it i got a one percent introduction loan and my mortgage came down the second month and went up to seven point nine zero and now it's up to nine point nine and it just keeps on going up if i'm paying twenty eight hundred dollars a month for my home i want to live next to j. lo and marc anthony. now where i am. we should not have to leave out homes dream i mean even us because the. the rates are going up so high and we don't even understand why it's going to it's going in somebody's pocket but not out of it should have been no surprise to anyone fraudulent lending practices resulted in

a steep rise in foreclosures beginning in late two thousand and six some of the biggest subprime lenders themselves later declared bankruptcy in the news media homeowners took most of the blame it was said they had exercised a failure of personal responsibility they're responsible borrowing was stigmatised irresponsible lending was not. into the fifty first a geisha the f.b.i. describes its responsibility for investigating financial fraud on its website it is called mortgage fraud and epidemic they're calling it operation malicious mortgage the f.b.i. unveiled the results of a three and a half month probe it's in mortgage related fraud f.b.i. director robert muller for this operation more than four hundred defendants have

been charged and we have a paid one hundred seventy three convictions in crimes that accounted for more than eleven billion dollars and estimated losses the f.b.i. first warned of this fraud epidemic in two thousand and four reporting also though that their corporate crime units had been downsized to join the fight against terrorism some criminal cases are reported in the press but not all are prosecuted with companies often paying fines rather than facing a judge or a jury goldman sachs paid sixty million dollars to settle a so brian complain the massachusetts authorities said they had designed mortgages to fail and they paid sixty million dollars but they did not made any deal that standard standard when wall street firms to go. what are in effect plea bargains with regulators for them not to admit guilt according to an investigation by the center for public integrity twenty five of the sleaziest

subprime lenders were backed by the biggest banks in the united states citi group wells fargo j.p. morgan chase and bank of america together the financial times reported they originated one hundred billion dollars in sub prime mortgages between two thousand and five and two thousand and seven almost three quarters of the total. what i did in the mortgage industry i first got involved in about one thousand nine hundred eighty i was a loan originator. and during that time what i had seen was nothing short of amazing in terms it was very predatory the techniques that were being used the salesmanship that was being used to give mix on the loans and how it was structured it really disturbed me catchall to this and how they could get away with that is people here full disclosure depending on the lending institution you went to in

other words a bank broker or a when the institution or three different all three have different sets of regulations that govern them and so full disclosure it wasn't necessarily important to the loan itself just get them to sign on the dotted line if they were happy with the numbers you have a loan. my name is moby dart i'm with you and say basically what we do is in some ways have more issues and several other issues but what i want to do is show the signature of bed and. what we're finding out is eighty percent of the people don't even know they have violations of. this is the signature on her one basically which is right here. and then have this signature here which is your actual signature which shows a completely different signature it doesn't take to me an expert to figure out that there's something terribly wrong here someone gets to set aside a loan docs and they're usually probably two to three inches thick and there might be fifteen or twenty really pertinent disclosures that clarity to worry about ok

and they're very good in there and i don't know what they're signing and usually they'll send out a notary to sign the loan with them at one time and the notary usually has no clue of what is in that loan and it's all part of the scheme we like to call it and then we go here we start looking at wideout and then we have a consultant fee. we see a consultant fee on the mortgage that should set off red flags that there's not really any consultants are on a mortgage or a sale that should have been one fee to rise mortgage this mark murphy is apparently someone we need to investigate and find out exactly who he is and why he got seventy eight hundred dollars of this long these people basically project we took this woman's home that she's been living in for over fifteen years and thinking that it's hers where it was actually never was her since one thousand nine hundred the fraud and deception that was built into these transactions was a necessary part of the transaction in order to generate the profits.

wall street doesn't do mortgage lending what wall street did was package sell repackage and resell mortgages making what was a small housing bubble a gigantic housing bubble and making what became an american financial problem very much a global financial problem will come to wall street today how kannan missed max wolfe who works in the financial industry he's our tour guide here looking at people who've gone through ten unthinkable low probability events in a four month period when every time you think you can catch a breather there's another leg down atmospheres on trading floors and in a lot of these firms are funerary old friends are gone bonuses are gone futures are on shore. it's been very difficult because we street people wanted to get into a conversation i mean the regular times i was with a bank examiner ten years ok and i wonder where the regulators are the city called

on them they got offices it was good when you're around you know there was yes you see where all the guys are supposed to be watching you know what's going on and i mean when i was about it's never been years ago you know we have surprises in the way they are that it's you know but we got to the homes around nobody got their arms around this i just wonder if you think the average person in america really grasped that it's across the room i hope they do and i think it's an excellent busted my personal guess is no my personal guess is they'd be much more angry and much more interested if they understand how much is on at play here. and the destruction there is a relic like it's red tape versions trade deals all the money's been made at this point all the take out happened a couple years ago now you just sort of looking up the remains of a very profitable time which will be followed by another very profitable time because the same people will still be involved in stretching the same types of

things his biggest crime in all of this is the thing that's the least able to be understood and examined by the f.b.i. by the department justice by anyone in washington d.c. the trading time the lowest layer of the crisis that started with subprime defaulting at the homeowner borrower level the money wasn't made there the money was made because several layers of the pyramid wall street investment firms and commercial bank investment groups decided to repackage this mortgage is create layers of them that they then resold to investors here's what happens there are three defaults on mortgages. the bank that holds the. sells goes at ten cents on the dollar to a second bank that bank puts those together with three other defaults and three other defaults makes a second package and sells to

a third bank the third bank sells six of these things from his and bundles them and sells them to some investor no idea what he has. they borrowed against those layers which is the real crime they would take a little piece of a layer of the security underneath the which somewhere there was a bunch of home buyers and they would take it and they would borrow thirty times the amount of money that it represented five big investment banks dominated wall street it is really who took the subprime loans purchased from banks packaged them as bundled investments to be sold worldwide there were reports that there was what was called sanction from wall street other words wall street investment houses as they began to make billions on these securitized loans and see deo's and derivatives were pressuring the mortgage people at the local level give us more give us more give us well the reason why wall street was putting the pressure or

the sucking sound that you referred to or the lower the originators is because the profits that they were generated with this whole concept first opened up and people realize the money that was to be paid on the back and treating the paper they were essentially creating liquid cash from nothing but talking to fourteen trillion dollars worth of assets back with sub prime and other types of mortgages and c.e.o.'s created between two thousand and three and two thousand and seven fourteen trillion were created on the. investment houses had funds and private equity funds could leverage thirty forty times banks could leverage fifteen to twenty times on average they could only leverage thirteen times on certain security more than the value of the whole country of the whole gross domestic product if you want average and this. a very conservative estimate assume that the average leverage for the fourteen trillion dollars worth of tax c.d.'s was ten times which to me is a conservative estimate that's one hundred forty trillion dollars worth of nothing

. if you lose the fourteen trillion the other hundred forty minus the fourteen trillion doesn't exist you have nothing you have no collateral left to pay to the people you borrowed money from it all falls down the practice to sell mortgages to people who clearly can't afford to target these people in order to give them mortgages and then to take uses mortgages to sell it back to the banks in order to create market but security is a criminal practice for sure and i think the bank does their. civil and considerably in some cases criminal but that's why build your rises when they sell their portfolio of mortgages to investors who believe they are getting. mortgages and there were very injured victims that chain that into the distribution chain

because i can direct you to school boards around the country that have lost almost your entire funds and lost their pension funds. i mean the best thing that's happening. now i have to point out ok. i can take such a kid. you know what i guess you can be ok that's. what i do and i would even say that this is racketeering because it took place between. real estate agencies and back. together a lot of people made a lot of money when these homeowners defaulted in record numbers. became infected.