great. so there will be a little. girl. welcome back you're watching r t and here's a recap of our top stories today as libya's new government gets ready for its un seat that reaps the old regime skosh there are fears that all the waver in support of the former rebels may lead to more civilian casualties. of a police and a new peacekeeper sees two checkpoints on the northern border with serbia ignoring the locals protests and warnings of escalating violence some. policy new leaders defy u.s. pressure and vowed to launch their year when the recognition bit sparking an

israeli government move to silence dissent in our vulnerable occupied territory settlements. and out next part one of our special report exposes the back streets schemes of the death gamblers who some to stumble into the financial abyss that's next year on our team. oh. are you going to leave the world. around this house so clearly. there is already. a lot of. critics of. the few smart. people who have to make their cooperation but whatever.

you. like. to say we live in the capitalist big 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 we have great capitalism as an economic system a system of production and distribution of things we need one i want to bring that to you i'm about to. there hope to be of michael thanks for the moment 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 and schemes that's not 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 bit we trust warned of a coming economic collapse. the stock that the next great economic crisis in a special report filed by the dept of rich it will create an economic crisis so deep they don't threaten says i was called a dinner and they were and a long list television. in the sixty's just didn't look good. 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 bailed 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. 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 will this film will explore the scale of money's missing written off lost and ripped off and these are various scams and in the case of the bailout funds unaccounted for. graydon carter editor of vanity fair we have some good of 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 may 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 if the dire poverty in other words never before have so few done 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 with the records . to help with our investigation we spoke with convicted white collar criminal san antonio the right color criminal hostile because phrase you subpoena documents we destroy documents you subpoena witnesses we walk so you are at a disadvantage because it's the right color for in effect we are economic predators . to an investigative reporter on the business beat wall street steals star more

than the mafia says gary weiss a wall street. take large much larger sums of money that were bought the mafia scalars the regulatory system is such that they can get away with the lack of media scrutiny the absence of regulation a widespread illusion that markets and real estate could only go up created this seed of mentality and environment for successful fraudsters and white collar criminals in your honor for many years up until my address on december eleventh two thousand and eight i operated a ponzi scheme i knew what i was doing was wrong and the criminal. white collar crime on wall street has been under-reported except for a very few high profile cases as one hundreds of reporters staked out a new york courthouse through court mission of guilt ponzi scheme

millions and millions of dollars being the source of many of them right oblique angry and ira worth one point three million the money was about one point eight million. it's gone on how do you think you got away with this for so long what now a person is going to stand for so many years without that effect that was one of the things i thought i. could successfully run a scam for that. was not a loan regulators are now investigating scores of similar crimes they say there is a ponzi monium under way this four levels and every right collar crime is the guy that gives the orders the people the waters 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 what it is but it participates so what they try to do is they try to get to the culpability of the guy at the top by working from the bottom

the problem that you have in the burnie way off cases they've got the guy at the top first and he's protecting the other three layers underneath that on wall street a lot of the extraction tends to be very borderline illegal because the people extracting tend to be the one setting up the legal framework route economics is well written not only calls it in our new book what is a lie the line between what is clear and what's still criminals disappear is because a did it will exemption but when you remove all the restriction when you remove all the controls then of course what is legal and want this is illegal so you're you're creating a crime scene and you're creating a crime. you're. upset that really by the police officers all at the same time only in the form of a regulatory body or excessive for the law as it were for last year in june two

thousand and nine the f.b.i. said it was investigating thirteen hundred securities fraud cases including many ponzi schemes as well as more than five hundred eighty corporate fraud cases and most of these cases got little attention but the media loves arch criminals like financier bernard made off there's a 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 what's that it's all put together it makes it a crime 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 a scam. to simplify there were three interconnected rings in this circus and

valving the biggest firms in the industry it started in the real estate business where our desire for homes the american dream was turned into a scheme first predatory subprime lending over years got people and to 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 involved 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 too 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 they centralized 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 to faulted 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 is a good thing it was stripped all of this for five days i've been focused all of

that didn't see anyone under strict nobody believes it nobody wants the rancid the housing crisis hit america like a tsunami destroying neighborhoods and costing millions of families their homes just a couple. sunk ok. but no better for 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 a ninja 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. at 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 we accepted onerous terms to give their families a piece of the american dream. and then even old into believing they could afford houses with no money down and load for the create interest rates and watch the cost of adjustable rate mortgages or the runs chewed up when i first got it i got a one percent introduction along then 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 and one hundred. next to j. lo and marc anthony. now where i say. we should not have to leave our homes our dream i mean even our shelters because you know the rates are going up so high and we don't even understand why it's going

up 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 and the news media homeowners took most of the blame it was said they had exercised a failure of personal responsibility irresponsible borrowing was stigmatized and responsible lending was not. into the fifth vista geisha b i described its responsibility for investigating financial fraud on its website it is called mortgage fraud and epidemic and they're calling it operation malicious mortgage the f.b.i. they'll never thought of it for a a half month probe it's a mortgage related fraud f.b.i.

director robert muller for this operation more than four hundred defendants have been charged and we have paid one hundred seventy three convictions in crimes that accounted for more than one billion dollars in estimated losses the f.b.i. first warned of this fraud epidemic in two thousand and four were putting also though that their corporate crime unit said 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 as brian complain the massachusetts authorities said they had this signed mortgages to fail and they paid sixty million dollars but they did not need any deal that standard standard when wall street firms. what are in effect plea bargains with regulators

for them not. 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 but two thousand and five and two thousand and seven i was three quarters of the total. what i did in the mortgage industry i first got involved it got legs i was alone 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 get next 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 or broker or lending institution or three different or all three have different sets of regulations that govern them and so full disclosure it wasn't necessarily important to the load itself just get them to sign on the dotted line if they were happy with the numbers you have a lot. my name is moe but over time with nancy basically what we do is in someone's house or issues and several other issues but what i want to do is show the signature of it and. finding out is eighty percent of the people going to know that my lesions on. this is the signature on her. basically which is right here. and then i 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 a set

a set alone docs and they're usually probably two to three inches thick and there might be fifteen or twenty really pertinent disclosures that for a fee to worry about ok and they're very good there i don't know what they're signing usually they'll send out a notary to sign the loan with them at lunchtime and a notary usually has no clue of what is in that line and it's all part of the scheme we like to call it and then we we go here we start looking at wideout and then we have a consultancy. we see a consultant fee on a 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 behind he got seventy eight hundred dollars on a small these people basically probably 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 ninety nine the fraud and deception that was built into these

transactions was a necessary part of the transaction in order to get her when 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. who came to wall street today o'connell missed max wolfe who works in the financial industry is our tour guide here looking at people who've gone through ten unthinkable low probability events in a four month period where every time you think you can catch a breeder there's another leg down atmospheres on trading floors and in a lot of these firms are funerary friends are gone bonuses are gone futures are on shore. it's been very difficult. street people want to get eventually

conversation i mean the regular members of the bank examiner take your ok and i'm going to with a regular sort of the sequel when i got offices it was going to year around you know there was yes you see where all the guys are supposed to be watching you know what's going to. be when i was about ten or twenty years ago you know we have some presses in the late eighty's early ninety's you know but we got to the homes around nobody got her arms around this and i just wonder if you think the average person in america really grasped that to address that really i hope they do and i think it's an excellent question my personal guess is no my personal guess is they'd be much more angry and much more interested if they understood how much is on a plate here. and the destruction there's a relic like it's read papers just read deals all the money's been made at this point all the takeout happened a couple years ago now you just sort of looking at. a very profitable time which

will be followed by another very profitable time because the same people will still be involved in such in 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 just by anyone in washington he was pretty tiny lowest layer of the crisis that started with sub prime defaulting at the homeowner borrower love all that 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 those mortgages and create layers of them with a better result to investors here's what happens there are three defaults on mortgages. the bank holds. sells those at ten cents on the dollar to a second bag 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 sells six of these things for kids as an bungles them and sells them to some investor was no idea what he had. they borrowed against those layers which is the real crime they would take a little piece of a layer of a security i didn't need 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 not street it was really 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 c.d.o. xin three that is pressuring the mortgage people at the local level kidless more

give us more give us well the reason why wall street was putting the pressure of the sucking sound that you referred to on the originators is because the profits that they were generated with this whole concept first opened up and people realized the money that was to be paid on the back and treating the paper they were essentially creating liquid cash from nothing but obviously such a scorching trillion dollars worth of aspects with subprime 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 that. investment houses had funds and private equity funds could leverage thirty forty times banks could leverage fifteen to twenty times on average they can only remember seventeen times on certain security or the new value of the whole country the whole gross domestic product if you want our rights in this. a very conservative estimate assume that the average leverage for the fourteen trillion dollars worth of tax studios 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 borrow money from it all falls down they practice it to saddle up more goods so people. clearly can't afford the time to get these people in order to give them mortgages and then to take uses mortgages to sell it back to the set in order to create mortgage backed security is a criminal. for sure and i think the bank does their. civil and considerably in some cases criminal but that's life build your rises when they sell their portfolio of mortgages to investors. who are mortgages and there

were very injured victims of that chain. distribution chain because i can direct you to school boards around the country that have lost almost there and funds and lost their pension funds. right. now i have to point out. that. i can take such a. life. and i would even say that this is racketeering because he took place between. real estate agencies and back. together a lot of people made a lot of money but when these homeowners the fall to the record numbers. came in fact.

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